Shortly after Interactive Brokers faced accusations about trying to evade document production in a lawsuit about its alleged aiding and abetting a Ponzi scheme operated by Haena Park, the electronic trading major has responded to these claims.

In a letter filed with the California Northern District Court on March 21, 2022, Interactive Brokers claims that there is no actual discovery dispute before the Court. Since the Parties began substantive discovery discussions less than four weeks ago, IBKR has retained a third-party vendor to restore years-old productions to the CFTC, and—despite certain technical setbacks—has now completed the restoration of those productions.

Interactive Brokers notes that, critically, the CFTC’s prior investigation broadly concerned the adequacy of IBKR’s AML program, and the vast majority of the documents produced did not concern Haena Park, her Ponzi scheme, or the factual allegations underlying Plaintiff’s amended complaint.

For that reason, among others, Plaintiff’s proposed compromise of being allowed direct access to the CFTC productions is inappropriate. It bears repeating that the Parties face no imminent discovery deadline. Rather, the only approaching deadline is Plaintiff’s March 25 deadline to oppose Defendant’s motion to dismiss the amended complaint. Nevertheless, Defendant anticipates being able to offer Plaintiff a realistic discovery plan by no later than March 30. Interactive Brokers submits that this proposal should moot this putative discovery “dispute.”

In this case, Plaintiff Benjamin Chang alleges that Interactive Brokers aided and abetted the Ponzi scheme operated by Haena Park. Mr Chang was introduced to Park through family members and was one of the people from whom Park solicited funds. He provided Park approximately $167,000 to invest and Park represented to Plaintiff it would be invested in Forex.

Park sent Plaintiff statements indicating his investment was growing when in fact his funds had been lost, redirected to other investors as Ponzi-style dividend payments, or used for Park’s personal benefit.

Chang claims to represent himself and others similarly situated as he brings this action against Interactive Brokers LLC (IBKR) for actual damages suffered by him and the class, and for other recovery specified herein for harm caused by IBKR aiding and abetting fraud and aiding and abetting breach of fiduciary duties.

Plaintiff and the class allege they are victims of a Ponzi scheme perpetrated with IBKR’s knowing assistance. The scheme was devised by Haena Park, an IBKR customer who solicited funds from Plaintiff and the members of the class through fraud and deceit and then misused those funds for her own gains and to make phony dividend payments to other investors caught up in the scheme.

IBKR allegedly recognized Park’s account was used to conduct a fraud, identifying her suspicious activity in reports reviewed by compliance analysts more than a dozen times during the life of the scheme. Rather than report Park to the authorities, IBKR supervisors disregarded their own compliance department’s warnings to further aid Park, a lucrative IBKR customer, to continue the scheme through its brokerage services.

Through her IBKR account, Park lost over $19 million of her investors’ contributions before the scheme was discovered by regulators and Park was arrested.

On October 6, 2021, Plaintiff served three Rule 34 document requests on IBKR. Plaintiff’s requests seek: (1) documents IBKR provided to any regulatory authority in connection with any investigation of Haena Park; (2) communications between IBKR and any regulatory authority in connection with any investigation of Haena Park; and (3) transcripts of any depositions or interviews of IBKR personnel that were conducted in connection with any investigation of the Haena Park Ponzi scheme.