I am suing E*Trade (requesting advice & opinions)

[PastaPrimavera]

What is the name of your state? California

Sorry if this is a bit long.

I am suing E*Trade Pro Se and would appreciate advice/opinions on my case. A couple of years ago, E*Trade engaged in a wholesale conversion of brokerage funds that were invested in Money Market accounts (invested in US Govt. Securities) into (practically) non-interest bearing deposit accounts of banks owned by E*Trade. They supposedly sent their customer’s letters informing them of this change stating that if the customer didn’t contact them, that the change would take effect in 30 days. I don’t recall ever receiving this letter and didn’t find out that they had sold my money market shares and put the proceeds into a checking account until over a year later. I believe this should be a class action suit.

My complaint:

E*Trade without my authorization, knowledge or consent converted two of my accounts with an approximate value of $XX,XXX.XX invested in Money Market funds into (practically) non-interest bearing Bank account owned by E*Trade. I allege the following:

1) E*Trade breached their fiduciary responsibility to me (their client of many years) to act in my best interest.

2) E*Trade conducted an unauthorized trade by selling my Money Market Funds from two accounts (including my Roth IRA account) and reinvesting the proceeds in some other account that is practically non-interest bearing (This account happens to be with E*Trade Bank)

3) E*Trade engaged in deceptive business practices including fraud and deceit.

4) E*Trade engaged in bait and switch.

5) E*Trade violated SEC and NASD Rules including IM-2210-1 Guidelines to Ensure That Communications with the Public Are Not Misleading.

Claimant requests actual damages of $XXX.XX Further, since this dispute did not arise out of a misunderstanding or misinterpretation, but rather as a direct result of intentional acts by E*Trade, I am requesting punitive and exemplary damages that will in addition to compensating me, deter E*Trade from engaging in this kind of activity in the future.

Prohibited conduct from the NASD website:

2) Purchasing or selling securities in a customer's account without first contacting the customer and the customer did not specifically authorize the sale or purchase, unless the broker has received from the customer written discretionary authority to effect transactions in the account or the broker was given discretion as to price and time.
3) Switching a customer from one mutual fund to another when there is no legitimate investment purpose underlying the switch.
5) Removing funds or securities from a customer's account without the customer's prior authorization.
13) Using any manipulative, deceptive, or other fraudulent device or contrivance to effect any transaction in, or induce the purchase or sale of, any security.

Nowhere does it say that they can engage in this prohibited conduct if they (supposedly) send a letter to their customer informing that they will make these changes unless they hear back within 30 days. What would prevent them from sending me a letter informing me that unless they hear back from me within 30 days they are going to sell my shares in IBM and purchase Microsoft?

I would be grateful for opinions and comments

 

[AlexandriaDumas]

Something you need to consider in advance:

E*Trade has many off-shoots, they change the names and merge and split off and sell parts of themselves regularly, too. For example, I think they sold some part of their company not too long ago to General Electric. Be very sure which E*Trade entity you are suing and of course, make sure you include DOES 1 through 100, inclusive, as defendants. What E*Trade might do if you aren't careful about proper naming is as the case progresses, at some point down the road they'll use the fact that you've sued the wrong entity to get out of the case, and then you'll have to waste your time with that, probably when many months have already gone by, add the new entities as DOE defendants, and basically start all over again. Just something to be aware of. They'll probably try to do this no matter what you do anyway.

Careful thought needs to be given to the court in which you going to file your lawsuit, too. If you look at your original paperwork (which you may not have as you probably opened your account online), they may have an arbitration clause. I would not recommend arbitration, especially if it's the AAA.

What you are thinking of doing is a very long, very expensive, very complicated process, even without the services of a lawyer. If you file in superior court, the filing fee is over $300. Every deposition will cost thousands of dollars. Every subpoena will cost hundreds, depending upon how many documents ae involved.

And without representation, your battle will be much more difficult. If you've already consulted with one or more attorneys you should already have a general idea of what you are attempting. If you haven't consulted with anyone, you should.

You might want to do some searches in your local superior court and see if there have been any lawsuits against E*Trade similar to yours. You could get copies of the filed documents which would provide some guidance.

If I haven't discouraged you too much, please know that I, too, agree with you that E*Trade needs to be made to feel the pain for their shady practices. Unfortunately, if you do this on your own, it's going to need to be an almost full-time job with a serious learning curve. Best of luck to you.

 

[PastaPrimavera]

Followup:

Thank you for your reply!

I filed for NASD Arbitration as I am almost certain that that was my only option (thought I would have much preferred a jury trial). The NASD has a helpful on-line complaint filing form that automatically fills in the defendant. The NASD also serves them. E*Trade already submitted their 10 page response claiming of course that their actions were proper since they sent me a letter telling me what they were going to do. An arbitrator was selected and we had our first pre-hearing conference. During this call the arbitrator informed me that he was serving on another arbitrator panel with the chief counsel for E*Trade (the guy who was representing E*Trade in my suit against them). He didn’t think that was a problem and claimed that he could still render an unbiased verdict. I completely disagreed and asked him to recuse (I hope that’s the correct term) himself. How could working on a case for six months with the guy I’m suing not bias him?? Now I’m waiting for another arbitrator from the NASD.