Order Failure
Order failure is a brokerage firm’s failure to execute, or to execute promptly and correctly, an order the customer placed, most often on an online platform during a market move. Tracy Pride Stoneman represents investors in these claims in FINRA arbitration nationwide, from Westcliffe, Colorado.
By Tracy Pride Stoneman, securities arbitration attorney Updated
| What happened | Rule or law | How it is proved |
|---|---|---|
| Order not executed, or executed late or at the wrong price | FINRA Rule 5310 (best execution); Rule 2010; Exchange Act §10(b) where a marketed feature was never delivered | The order audit trail (CAT), screenshots, time-stamped acknowledgments and confirmations |
| Platform outage during a market move | FINRA Rule 4370 (business continuity plans); Rule 2010 | Outage logs, status pages, press coverage, FINRA notices on the event |
| Margin liquidation without proper notice | FINRA Rule 4210; Regulation T; the firm’s margin agreement | Margin-call notices and their timing against the liquidation |
| The customer agreement’s limitation-of-liability clause | FINRA Rule 2268(d): a predispute arbitration agreement may not limit a customer’s claims or the panel’s power to award damages | The clause itself, read against the rule |
A FINRA panel can award compensatory damages (out-of-pocket losses or market-adjusted “well-managed account” damages), interest, costs, attorney’s fees where a statute or contract allows them, and punitive damages in egregious cases. Claims must be filed within six years of the events under FINRA Rule 12206, and shorter state statutes of limitation may also apply.
If any of this sounds like your account, the next step costs nothing: a free, honest evaluation. Tell me what happened or call (719) 783-0303.
Common questions
Order Failure: what clients ask
What is best execution?
FINRA rules require firms to use reasonable diligence to get customers the most favorable terms reasonably available when executing an order. Failing to do so can support a claim.
My online broker's system went down when I tried to trade. Is that covered?
Possibly. Firms are expected to maintain systems that can handle trading demand and to have backup plans. Outages that prevent customers from trading can lead to claims when they cause real losses.
How are damages calculated?
Usually by comparing what happened with what would have happened if the order had been executed correctly: the difference in price, quantity, or timing.
Your move
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