DIY Investing Cases

OBSI’s approach to DIY investing cases 

When an investor brings a complaint about a DIY investment firm (also known as an order-execution-only or OEO firm) to us, it is usually because they have experienced a financial loss and believe that the firm has played a role in what happened to them. During our investigation, we will speak to both the consumer and the firm to ensure we understand their views about what took place, and we will review the consumer’s file and account-opening agreement. The consumer’s file provides us with documentation about their account, such as a margin account application and transaction statements, while the account-opening agreement outlines:

• the level of service the firm offers;
• risks associated with the firm’s service;
• the terms and conditions that consumers agree to before opening their account;
• disclosures that explain what the firm is responsible and not responsible for; and
• the fees and interest incurred from account activity, such as keeping an account open, purchasing and selling securities, borrowing on margin, and using telephone assistance.   

We also consider regulations, legislation, and accepted industry practices when investigating the consumer’s complaint. In response to the significant increase in retail trading and complaints about service issues during the pandemic, IIROC issued a notice in May 2021. It announced their commitment to prioritize a review of OEO firms’ historical information related to their online trading availability, functionality, and service, and determine if it is a regulatory concern. Any future policy changes would inform our investigations once put into force.

Unless the consumer experienced a financial loss because the firm did something they were not permitted to do, did not follow their own policies and procedures, or exercised their contractual rights in an unfair way, we generally do not recommend compensation. If firms have acted in a way that they are legally and contractually permitted to do, have followed their own policies, and have not treated the consumer unfairly, we will not hold them responsible for investing mistakes or decisions that a consumer has made when using the firm’s services.

Related case studies and resources

DIY investing leads to more than $100,000 in losses

Consumer alleges online investing app misled her about margin borrowing and interest obligations

IIROC Investor Bulletin: Is a DIY account right for me? (February 2021)