A lawsuit brought by a customer of electronic trading major Interactive Brokers continues at the Connecticut District Court. In this case, Robert Scott Batchelar accuses Interactive Brokers, LLC of negligent design of its trading software, so that an automatic liquidation of the positions in his account cost him thousands of dollars more than it should have.
On June 21, 2021, the parties have provided an update to the Court. The broker and the trader have met and conferred regarding the plaintiff’s contentions that Interactive Brokers’ Source Code productions are incomplete. The parties have agreed to resolve this dispute by entering into stipulation.
During the remainder of class certification discovery, Batchelar will not request the production of additional Source Code or move to compel the production of additional Source Code.
The document submitted at the Court also provides information regarding the plaintiff’s current putative class definition. At present, it states:
“All United States residents who at any time from 12/18/2013 to date of trial had margin accounts with IB, which accounts had trades conducted by the Auto-Liquidation Software.”
Batchelar states that his current theory of liability is that Interactive Brokers’ Auto-Liquidation Software was negligently designed, coded, maintained and used such that it permitted a liquidation transaction to be executed on terms less favorable to the customer than the terms for that liquidation transaction authorized by the Auto-Liquidation Software.
(The term “Auto-Liquidation Software” means the Source Code that Interactive Brokers have produced in this action).
Now, the parties seek to shift some of the deadlines in this case. On June 8, 2021, Batchelar served on Interactive Brokers a notice of deposition of a representative witness(es) that identified matters for examination that were substantially broader than the matters for examination that he had most recently proposed in February 2020, prior to the disruptions to business and travel caused by the COVID-19 pandemic. Interactive Brokers says it needs additional time to identify and prepare a representative witness(es) to testify about these matters for examination.
The source code has been at the heart of a discovery dispute pending since at least August 2020. Batchelar said that IB was withholding Source Code from three of the six modules.
Let’s also recall that in May 2019, Albert Lukazik, a Software Engineering Department Head, Senior Technology Manager, and Information Security Officer for Interactive Brokers LLC and Interactive Brokers Group, Inc., filed a Declaration in support of defendants’ objection to produce source code materials.
In his Declaration, Lukazik stressed that the source code is one of Interactive’s foundational assets and incorporates its trade secrets and know-how accumulated over a period of more than 20 years. The source code includes some 600,000 lines of code and refers to various subsystems within Interactive’s trading system. If access to Interactive’s source code were made public, the brokerage’s competitors would potentially be able to replicate aspects of Interactive’s margin liquidation system, Mr Lukazik noted back then.