Options traders hit up TD for $8.2M in losses

thinkorswim users file arbitration claim saying that they couldn't get through to execute trades in August

Jan 15, 2012 @ 12:01 am

By Dan Jamieson

TD Ameritrade Inc. has been hit with an $8.2 million arbitration claim by a group of options traders who say that they lost money last summer during the 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 wouldn't accept trades that would have reduced risk.

The traders claim that the firm then sold out positions to meet margin calls, compounding their losses.

“My clients were not able to get through to [TD Ameritrade] in a timely manner” to place trades via phone or chat, said their lawyer, Daxton White, founder of The White Law Group LLC.

All 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, but that's exactly when it happened,” Mr. White said.

In response to reports of the glitch, the company said that 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 registered investment adviser clients, as well as to individual investors.



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