2014 QCCQ 12067, 2014 QCCQ 12067

Iom c. Tradefreedom Inc. 2014 QCCQ 12067 COURT OF QUEBEC Division of small claims CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL TOWN OF MONTREAL No: 500-32-134068-123 DATE: November 18, 2014 ______________________________________________________________________ PRESIDING: THE HONOURABLE DANIEL DORTELUS, J.C.Q. ______________________________________________________________________ SUN XIAO IOM Plaintiff vs. TRADEFREEDOM INC. Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ 1.

THE ISSUES [ 1 ] Plaintiff is suing the defendant for $ 7000 in damages. [ 2 ] She alleges that she was misled by the defendant, who did not inform her in a timely manner of the modifications that were brought to the 5 000 shares of the American International Group (AIG). These shares were subject to a transformation at the ratio of 1 for 20 around June 30 th , 2009, which reduced the number of her shares at $ 250. [ 3 ] As a result, when she sold her AIG shares on July 1 st , 2009, she had sold an excess of 4 750 shares. [ 4 ] Defendant contests the claim.

It alleges that the information concerning the dividing of the shares at the ratio of 1 for was published before 8:00 AM on July 1 st , 2009 and this information was available on its online platform, which was used on July 1 st 2009 to make the transactions. [ 5 ] Defendant contends that the plaintiff attempted four (4) times to effectuate transactions relating to the 5 000 shares on July 1 st , 2009. Her attempts to effectuate transactions at 8:02 AM, 8:02 AM, 8:13 AM and 8:22 AM all failed.

She finally succeeded in selling the shares around 9:30 AM at the price of $ 19.60 per share. [ 6 ] Defendant submits that Plaintiff who is a self reliant investor is responsible for any orders entered in the platform. According to the “TradeFreedom account agreement and disclosure statement” signed by the parties, she is responsible for her investment decisions, as well as for any profits or losses that may arise. 2. THE FACTS [ 7 ] The relevant facts can be found in exhibit D-1 of the defendant.

They are reproduced here: “The plaintiffs have indicated that Trade Freedom Securities misled them regarding a corporate action of company AIG, resulting in a loss for which they are claiming $7,000. On June 30, 2009, the plaintiff held 5,000 shares of AIG. This company went through a corporate reorganization, a reverse split, which resulted in AIG shareholders receiving 1 new share for every 20 shares, held. The symbol remained the same, AIG. The company issued a Press Release on June 30 2009 confirming the approval of the reverse split (see attached release).

TradeFreedom also issued a website alert at 8:50am advising customers that AIG had undergone a 1 for 20 reverse split (see attached alert log) The plaintiff purchased their 5000 shares on May 22nd, 2009 for $1.68 per share. After a 1 for 20 reverse split the plaintiff would hold 250 shares. Prior to the reverse split the price of AIG was approximately $1.25 per share. After the reverse split the price was approximately $20 per share. During email communication with the plaintiff, the plaintiff confirmed that at 8:30am on July 1, that when the plaintiff checked the price it was approximately $19.57 per share.

This would confirm that the plaintiff was aware that the stock price had increased significantly as a result of the reverse split.

On the morning of July 1st, prior to 08:30, the plaintiff attempted on 4 different occasions to place an order to sell 5000 shares of AIG. Each of these attempts were rejected by our trading systems since the plaintiff would only have 250 shares remaining after the consolidation is completed. Moreover, the plaintiff stated in their email that she wanted to short the AIG shares since the stock was weak, however, each of the orders that plaintiff entered on July 1, 2009, were to sell the shares outright and not to short the AIG shares.

Consequently, these actions support our view that the plaintiff was trying to sell more shares than she had in her account. The plaintiff sold 5000 shares on July 1 at 9:30am and the stock was trading at the post reverse split price and received an average price of $19.58 per share. The client oversold 4,750 shares, as the plaintiff was only entitled to 250 shares. Once, it was discovered that the plaintiff had oversold 4,750 shares too many, TradeFreedom acted prudently to remove any further market risk by purchasing back 4,750 shares at an average price of $20.83 per share.

Thus, there was a loss of $1.25 per share or $5,937.50 as a result of the oversell and buyback, for which the plaintiff bears responsibility. TradeFreedom accounts are operated by self-managed investors. Clients confirm their acknowledgement that they are responsible for their investment decisions by signing a customer agreement to this effect. Please find attached the customer agreement dated July 22, 2008, signed by the plaintiff at their account opening acknowledging that TradeFreedom does not provide advice and that they are responsible for their investment decisions. “ [SIC] 3.

CONTENTIONS OF THE PARTIES [ 8 ] Plaintiff contends that the defendant had the obligation of giving precise information regarding the shares on its online platform. [ 9 ] She submits that the defendant did not fulfill its obligation, and therefore it should be held responsible for the losses she suffered as a result of the erroneous selling of the shares. [ 10 ] Defendant contends that it fulfilled its obligation to inform the plaintiff of the modifications that affected the shares that are at the heart of this dispute.

As such, Defendant pleads that Plaintiff should be held responsible for the consequences flowing from her actions, given that she manages her own account and that she effectuated the transactions. 4.

ANALYSIS [ 11 ] The plaintiff’s motion is dismissed for the reasons that follow. [ 12 ] The plaintiff is bound by the provisions of the “TradeFreedom account agreement and disclosure statement” that she signed on July 22, 2008, when she opened her account with the defendant. [ 13 ] The following excerpt from the agreement contains this relevant clause: “ I acknowledge that TradeFreedom Securities Inc, does not give any Investment advice, nor does it verify that investments are in accordance with my financial situation , investment knowledge, objectives or risk tolerance, and that I am responsible for my investment decisions, as well as for any profits or losses that may arise.

I further acknowledge that it is my obligation to comply with the requirements of the Exchanges, ECN’s, Market Makers or other executing venues respecting the entry and trading of orders and that TradeFreedom reserves the right to reject, change, remove or cancel any order or trade which is not in compliance with applicable requirements. “ […] (Emphasis added) [ 14 ] The evidence presented demonstrates the veracity of the defendant’s claim that the plaintiff was properly informed of the modifications that affected the shares.

Indeed, exhibit D-4 of the defendant shows that four (4) attempts to complete transactions were made by the plaintiff and they all failed. [ 15 ] According to the defendant’s representative, when a transaction is refused, the electronic system provides the user with a reason for the refusal.

This was not contested by the plaintiff. [ 16 ] The Court finds that the claim by the defendant’s representative that the information regarding the modifications affecting the shares was available on its online platform the day before the plaintiff’s four (4) failed attempts to effectuate the transactions is credible. [ 17 ] Plaintiff has not succeeded in showing that the defendant failed to fulfill a contractual obligation and that she should be entitled to any damages. As a result, plaintiff’s motion must be dismissed.

FOR THESE REASONS, THE COURT : DISMISSES , with costs plaintiff’s motion. __________________________________ Daniel Dortélus, J.C.Q.

Date of hearing: October 27, 2014