E-Trade Group Inc. (NasdaqNM:EGRP – news), the No. 2 Internet broker, has been ordered to pay a customer more than $61,000 plus interest and costs as a result of a mishandled order, lawyers involved said Monday.
The case, which was decided by a National Association of Securities Dealers (NASD) arbitration panel in San Francisco, showed that E-Trade cost the customer, Ali Lee Khadivi, more than $53,000 when it executed a limit order that he had previously cancelled, according to the law firm which represented Khadivi.
A limit order allows an investor to buy or sell securities at a specific price.
“I’m very happy that I won this case,” Khadivi said in an interview. “Regardless of the money, I feel good that I was right and that I was able to prove that I was right.”
Khadivi, a software consultant from Santa Clara, Calif., said he will continue to buy and sell stocks online but has not yet decided which broker he wants to use.
“This is the end of it,” said E-Trade spokesman Patrick DiChiro. “We don’t agree with the award but we had our day before the NASD and we will abide by the agreement and move on.”
The case stemmed from a February 1999 outage that disabled E-Trade’s online trading system. “The circumstances that led to this were about a year ago… and we have made made really significant progress across the board in all of our customer service,” DiChiro said.
Last year, 55 arbitration cases involving online trading disputes came to the NASD, according to NASD regulation spokeswoman Amy Hyland.