Dopey surgeon loses $200k on dud deal – sues E-Trade, and wins
Stupid greedy people need looking after
A stock speculator who blew $200,000 on a foolish dotcom buy has successfully sued online broker E-Trade.
Jay Kiessling was awarded $203,333.15 after a panel of the National Association of Securities Dealers decided E-Trade processed the buy order without caring about the risks for its customer, the Chicago Sun-Times reports.
Kiessling, a surgeon from Alabama, lost the cash two years ago when he bought shares in Theglobe.com, a company that personalizes Web pages.
The company had just ended an IPO at $9 per share, and a brief stock market frenzy sent its share price rocketing. But trading in the stock was halted that day - something Kiessling was not told - and although he bought a stack of shares at between $84 and $86 a share, by end of the day the price had dropped to around $30. (In today's cyber-sceptic market, investors can pick up one of Theglobe.com's shares for around 78 cents.)
Kiessling felt he had been denied crucial market information - and that E-Trade had broken its contractual promise to stop customers from trading beyond their means. He had a margin account with E-Trade, which let him borrow up to half the cost of the stock he wanted from the online broker. At the time of the purchase, his account allowed a maximum $144,000 buy, but E-Trade let the order slip through for around $422,000.
"Be very careful with these online brokers," said Kiessling, who still has an E-Trade account. "When they say they're offering the same service as a [conventional] broker, they're not. You're giving up a lot more than simply high brokerage fees."
E-Trade pleaded innocence, saying its systems could not stop Kiessling's order. ®