Ex-client of Interactive Brokers replies to counterclaim

Robert Scott Batchelar – a former customer of Interactive Brokers, has responded to a counterclaim filed by the company alleging that he owes approximately $75,000 to the brokerage.

Batchelar is suing Interactive Brokers alleging that Interactive’s trading software was negligently designed, which resulted in an automatic liquidation of the positions in his account that cost him thousands of dollars more than it should have. Interactive Brokers has failed to dismiss the lawsuit, and had to respond to the plaintiff’s complaint by November 1, 2019. The response included a counterclaim against the plaintiff.

Interactive Brokers LLC asserts a counterclaim for breach of contract against Batchelar to collect a current unpaid negative balance in his margin account of (-) $75,244.88, inclusive of unpaid fees and charges. According to the brokerage, Batchelar owes this money to Interactive pursuant to the Customer Agreement between them. Interactive seeks a judgment declaring the mandatory arbitration provisions of the Customer Agreement valid and enforceable and compelling Batchelar to arbitrate the counterclaim.

Batchelar is alleged to have explicitly agreed, as part of the Customer Agreement, to reimburse Interactive for the cost, including attorneys’ fees, of collecting any negative balance in his margin account.

Batchelar, however, claims that the elimination of his positions by Interactive’s software was disproportionate to the market and cost him somewhere between $95,145 and $113,807.

In his Second Amended Complaint, Batchelar alleges that the auto-liquidation was “the result of negligent design, coding, testing and maintenance.” He alleges that the programming flaws were the result of Interactive’s failure to meet industry standards in its design and testing of the software and its failure to include certain instructions in the algorithm.

On November 22, 2019, Batchelar filed his answer to Interactive Brokers’ counterclaim with the Connecticut District Court. In his response to Interactive Brokers’ counterclaim, Batchelar argues that his claim against Interactive in his Second Amended Complaint (and any further amendments) is an affirmative defense and offset against Interactive’s claims.

According to Batchelar, the broker breached the contractual arbitration clause by bringing its counterclaims in this action.

Finally, Batchelar argues that Interactive’s liquidation of his account paid in full, or in part, the amount owed by him (if any). Accordingly, Batchelar insists that the counterclaim should be abated until the motion to certify has been decided in this case.