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Panel orders E*Trade to pay investor after loss

A National Association of Securities Dealers panel rules that the online brokerage must pay almost $40,000 to a former customer over losses tied to an allegedly erroneous stock price.

Regulators have ordered E*Trade to pay $38,226 to a former customer over losses he incurred after the online brokerage allegedly issued an erroneous stock price.

An arbitration panel for the National Association of Securities Dealers (NASD) on Monday found in favor of Morgan Roach, who accused E*Trade of negligence and breach of fiduciary duty for misstating the price of America Online options during AOL's merger with Netscape Communications two years ago, records show.

Roach said he suffered major losses in his brokerage account by trading on the information. Menlo Park, Calif.-based E*Trade denied Roach's claims and filed a counter-claim against him that was denied as part of Monday's ruling.

E*Trade did not return repeated phone calls seeking comment.

This is the second time in a week that an NASD arbitration panel has found against E*Trade.

On Thursday, a panel ordered E*Trade to compensate a surgeon more than $200,000 after it was found that the company denied him important market information and violated a contractual obligation to protect customers from trading beyond their means.

Bloomberg contributed to this report.