Not upheld: failure to warn of security risk / inadequate disclosure prior to purchase complaint against eToro (UK) Limited

Decision detail

Summary

Mr S purchased shares in company X through eToro without knowing that X had begun bankruptcy proceedings the previous month. After X was delisted and his shares were written off at a $1,000 USD loss, Mr S complained that eToro should have warned him of the bankruptcy proceedings before allowing the purchase. eToro rejected the complaint, arguing traders are responsible for their own due diligence. The ombudsman upheld eToro's position, finding that under the execution-only dealing agreement, Mr S accepted sole responsibility for his trading decisions and eToro was not required to provide explicit warnings beyond standard information. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman interpreted eToro's obligations within the context of execution-only dealing services. Mr S accepted sole responsibility for his trading decisions and the terms made clear customers should understand risks before trading. There was no regulatory requirement for eToro to mark X's shares as involving outsized risk, and the firm provided standard basic information consistent with its service commitments. While eToro could have done more, the absence of additional warnings does not constitute unfair treatment.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website