District Court Grants Preliminary Approval of Class Action Settlement Against Securities Trading Platform and Broker

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On August 29, the U.S. District Court for the Northern District of California granted preliminary settlement approval in a class action lawsuit against a securities trading platform and broker (defendant) for allegedly authorizing unauthorized users to access customer accounts. As described in the Plaintiffs’ Motion for Preliminary Settlement Approval, Class Members alleged that Defendant “lacks security measures used by other online brokerage systems”, which allowed “thousands of [the defendant’s] customer account [to be] accessible by unauthorized users. Based on these allegations, the class members sued for negligence, breach of contract, and violation of various state privacy, competition, and consumer advertising laws. Under the terms of the pre-approved settlement, the defendant is to provide cash payments of up to $260 each to settlement class members who submit a claim, up to an aggregate amount of $500,000. In addition, among other things, the defendant must “provide two years of credit monitoring and identity theft protection services to those who choose to receive it”, must “maintain improvements to its security protocols and policies to reduce the risk of unauthorized access to its customers”. ‘accounts” and must “respond effectively to potential instances of unauthorized access” in the future.

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