TD Ameritrade Inc. has been hit with an $8 million arbitration claim by a group of options traders who say they lost money last summer during final integration of the thinkorswim trading platform.
The arbitration, filed late last month by two investment funds and five individuals, alleges that during the market drop in August, TD Ameritrade's option-trading system would not accept trades that would have reduced risk.
The traders claim the firm then sold out positions to meet margin calls, compounding their losses. They are asking for $8.2 million in damages.
“My clients were not able to get through to [TD Ameritrade] in a timely manner” and place trades via phone or chat, said their lawyer, Daxton White, founder of The White Law Group LLC.
All of the traders were original thinkorswim clients who traded on a margin-account platform that was reserved for the most experienced and active options traders, according to the claim.
TD Ameritrade bought thinkorswim Inc. in 2009, primarily for its options-trading technology.
Representatives of TD Ameritrade declined to comment on the case.
As part of the integration in August, TD Ameritrade shifted thinkorswim's clearing arrangement from Penson Worldwide Inc to its own system.
”I don't know what caused the glitch,” Mr. White said, “but that's exactly when it happened.”
In response to reports of the glitch, the company said the problem arose when 250,000 clients were moved to TD Ameritrade, which forced them to place orders by phone.
TD Ameritrade has promoted its options-trading capability to its independent RIA clients as well as to individual investors.