Not upheld: failure to prevent losses from market manipulation scam; inadequate monitoring and warning systems complaint against Interactive Brokers (U.K.) Limited

Decision detail

Summary

Mr U opened a trading account with IBUK in May 2025 and purchased shares in company X based on a social media promotion, unaware it was a pump and dump scam. After incurring losses when the share price fell in June 2025, he complained that IBUK should have identified and acted upon the scam sooner, particularly noting that IBUK had restricted another similarly promoted stock earlier. IBUK rejected the complaint, explaining it operated as an execution-only broker with no advisory responsibility and had provided comprehensive information about such scams. The ombudsman upheld IBUK's position, finding that as an execution-only broker, IBUK bore no responsibility for Mr U's trading decisions, had taken reasonable steps to inform customers about scams, and that its surveillance system, while not 100% effective, showed no evidence of incorrect or inconsistent application.

The Ombudsman's reasoning

The ombudsman concluded that IBUK, as an execution-only broker, bore no responsibility for Mr U's trading decisions. IBUK had provided comprehensive information about pump and dump scams and Mr U had acknowledged understanding this. While IBUK's surveillance system did not detect the issue with X shares as quickly as it had with another stock, no surveillance system is 100% effective and IBUK offered no guarantee of such effectiveness. The ombudsman found no evidence that IBUK's system was applied incorrectly, inconsistently, or with unreasonable delay. IBUK could not be held responsible for the actions of third parties conducting the scam.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website