Not upheld: account restriction and compliance procedures; dispute over SEC Rule 144 interpretation and trading thresholds complaint against Interactive Brokers (U.K.) Limited

Decision detail

Summary

Mr B complained that Interactive Brokers unfairly restricted his ISA trading account on 15 October 2025 to conduct compliance checks under SEC Rule 144, preventing him from selling a US microcap stock and resulting in a loss of $4,396.98. Mr B argued that the restriction was inappropriate because he was not an affiliate and that IB had misapplied the trading threshold under Rule 144 by using a lower threshold for convenience. The ombudsman found that IB acted reasonably in placing the temporary restriction to verify Mr B's affiliate status before completing the trade, that the restriction was lifted promptly within approximately 48 minutes, and that Mr B was aware of the potential for compliance reviews. The ombudsman did not uphold the complaint, finding no evidence that IB had acted unfairly or made an error in its cautious approach to compliance with regulatory obligations.

The Ombudsman's reasoning

The ombudsman found that IB had reasonable grounds to place a temporary restriction on Mr B's account to conduct compliance checks, as the trade involved a US microcap security potentially subject to SEC Rule 144. Although Mr B disagreed with IB's interpretation of the applicable trading threshold, the ombudsman found no evidence that IB had acted unfairly or made an error in taking a cautious approach to compliance. The ombudsman noted that Mr B was aware of the potential for compliance reviews, the restriction was lifted promptly (within approximately 48 minutes), and IB was entitled to decide how it meets its regulatory obligations without providing detailed advance notice of its interpretation of Rule 144.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website