NEW YORK — A customer who says E*Trade Securities Inc. mishandled his stock-trading order, refused to respond to his complaint, then sent a collection agent after him has been awarded more than $60,000 by an arbitration panel.
The panel, convened by the regulatory arm of the National Association of Securities Dealers, has ordered E*Trade, the online brokerage unit of E*Trade Group Inc. of Menlo Park, Calif., to pay Ali Lee Khadivi $61,203 in compensatory damages and interest as well as pay expert witness and forum fees. It denied Mr. Khadivi’s request for punitive damages. The decision was served last week.
Mr. Khadivi had alleged that in early 1999, he had placed an order to buy 1,000 shares of Perot Systems Corp. at no more than $71, then shortly afterwards canceled it. In spite of receiving the cancelation request, E*Trade executed the order anyway. Mr. Khadivi said he phoned immediately and repeatedly to protest, but with no response. After the stock plunged, E*Trade liquidated his account to repay a margin loan. Mr. Khadivi said he was later called by a collection agent demanding he repay the debit balance in his account or be reported to a credit-rating agency. His experience was described in a June article in The Wall Street Journal1 about customer dissatisfaction with E*Trade.
In its response, E*Trade had alleged that Mr. Khadivi was responsible for the loss because he waited too long to complain. But one of Mr. Khadivi’s lawyers, Phil Aidikoff, said transcripts of phone calls show he complained immediately, but it took E*Trade five days to initiate a trading inquiry and 40 days to complete it.
Patrick Di Chiro, a spokesman for E*Trade, said, “While we disagree with the award, we had our day before the NASD and we of course will abide by the judgment.”