Online Financial Trading – $460,000 ‘Profit’ Made from Abusive Trades
Online platforms make it possible for almost anyone to have a flutter on the financial markets. However, web-based trading can be open to abuse and that was certainly so in one case concerning a retired teacher who made a profit of more than $460,000 in less than a minute.
In very quick succession, the woman had placed 43 orders, totalling $130 million, to sell gold and buy US dollars on a foreign exchange and commodity broker’s website. Within the same minute, she closed all the positions, making a handsome profit. After the broker refused to pay her, on the basis that the trades were abusive, she launched proceedings alleging breach of contract.
In dismissing her claim, the High Court found that she had taken advantage of a high-speed news feed that gave details of a US payroll data announcement that would inevitably affect market prices. She carried out the trades in the seconds before the announcement was reflected in the prices quoted by the broker. The trades had been placed with foreknowledge of the announcement, without risk, and the Court ruled that it was a classic case of abusive trading. The broker had thus been entitled to revoke the trades.