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Evans v. E*Trade Securities LLC

United States District Court, N.D. Indiana, Fort Wayne Division

December 13, 2017




         Plaintiff Jamar James Evans, proceeding pro se, filed a Petition to Vacate or Set Aside a Financial Industry Regulatory Authority (FINRA) Arbitration Award [ECF No. 1] on September 7, 2017. On October 30, 2017, Defendant E*TRADE Securities LLC filed a Memorandum in Opposition [ECF No. 10] to the Petition as well as a Cross-Petition [ECF No. 9], asking the Court to confirm said arbitration award. The Plaintiff responded on November 20, 2017 [ECF No. 12], and the Defendant filed a Reply [ECF No. 15] on November 28, 2017. This issue is now fully briefed and ripe for review.


         The Defendant is an electronic, online discount brokerage that offers order execution services for low commission prices as compared to traditional broker-dealers. Most of the Defendant's customers conduct business through its website and never speak directly to a broker or customer service representative. Customers may also conduct business through the Defendant's mobile application. The Plaintiff has used the Defendant's services since March 2010, and he conducts most of his business via the mobile application.

         When the Plaintiff opened his account, he was required to agree to the Defendant's Securities End-User License Agreement (“the User Agreement”), which provided in relevant part:

I ACKNOWLEDGE THAT I ALONE AM RESPONSIBLE FOR DETERMINING THE SUITABILITY OF MY INVESTMENT CHOICES IN LIGHT OF MY PARTICULAR CIRCUMSTANCES. I UNDERSTAND THAT E*TRADE SECURITIES ASSUMES NO RESPONSIBILITY FOR SUCH DETERMINATION. As a self-directed investor, I assume full responsibility for each and every transactions in or for my Account and for my own investment strategies and decisions. I understand and agree that E*TRADE Securities and its affiliates will have no liability whatsoever for the results of my investment strategies, transactions and decisions.
(a) No Advice Unless otherwise specified in writing, E*TRADE Securities does not and will not provide me with any legal, tax, estate planning or accounting advice or advice regarding the suitability, profitability or appropriateness for me of any security, investment, financial product, investment strategy or other matter. . . . I also acknowledge that E*TRADE Securities neither assumes responsibility for nor guarantees the accuracy, currency, completeness or usefulness of information, commentary, recommendations, advice, investment ideas or other materials that may be accessed by me through the Service. . . . If I choose to rely on such information, I do so solely at my own risk. . . .
6. TRADING PROVISIONS (a) Responsibility for Orders All orders for the purchase and sale of Securities and/or Other Property given for my Account will be authorized by me and executed in reliance on my promise that an actual purchase or sale is intended. . . .

         On October 6, 2016, the Plaintiff used the Defendant's mobile trading system to enter a number of orders relating to stock options. The Plaintiff claimed that there was an issue with the Defendant's mobile application that caused him to purchase options contracts with expiration dates of October 7, 2016, when he intended to purchase options contracts with expiration dates of October 14, 2016 (“the Expiration Date Issue”). A customer service representative was able to help him fix this error, but the error resulted in some monetary losses.

         The Plaintiff also claimed that, until October 18, 2016, the Defendant's website incorrectly indicated that Amazon, Inc., would announce its third quarter earnings on October 21, 2016, when, in fact, Amazon's earnings were not to be announced until 5:30 P.M. Eastern Standard Time on October 27, 2016. He argued that he purchased numerous options contracts with expiration dates of October 21, 2016, in reliance on the incorrectly posted date (“the Next Earnings Date issue”). He claimed that, if he had known that Amazon's third quarter earnings would not be posted until October 27, 2016, he would have purchased options contracts with expiration dates of October 28, 2016, and thereby avoided his monetary losses. The parties disputed how much of the Plaintiff's monetary losses were attributable to the actual purchase of the options contracts and how much were unavoidable based on the Plaintiff's choice to invest in Amazon.

         On August 29, 2017, the parties appeared before an arbitration panel. The Plaintiff requested $60, 500 in compensatory damages as well as $950, 000 in punitive damages. The Defendant argued that it was not liable for any of the Plaintiff's losses based on the User Agreement, but that, in the event the Arbitrators found that the Defendant was liable under the User Agreement, the maximum losses the Plaintiff suffered were $2, 358.77 due to the Expiration Date Issue and $739.39 due to the Next Earnings Date Issue. On September 1, 2017, the panel awarded compensatory damages to the Plaintiff:

         After considering the pleadings, the testimony and evidence presented at the hearing, the Panel has decided in full and final resolution of the ...

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