Interactive Brokers Algorithm $5M Settlement, Are You Eligible to Receive a Payment?

Interactive Brokers LLC, Interactive Brokers Group Inc., and executive Thomas A. Frank agreed to pay $5,000,000 to settle a class action lawsuit alleging their automated margin liquidation software was negligently designed and caused customers to lose more money than necessary. U.S. margin account holders whose positions were liquidated between December 18, 2013, and July 14, 2025 may qualify for an automatic payment — no claim form required. The opt-out deadline is May 27, 2026.

Quick Facts

Field	Detail
Settlement Amount	$5,000,000
Opt-Out Deadline	May 27, 2026
Who Qualifies	U.S. margin account holders liquidated by IB’s auto-liquidation software, Dec. 18, 2013–July 14, 2025
Payout Per Person	Pro rata share of net fund (amount TBD)
Proof Required	No — eligible class members receive automatic payment
Settlement Status	Proposed — awaiting preliminary approval
Administrator	Simpluris
Official Website	InteractiveBrokersSettlement.com

Current Status & What Happens Next

• The parties filed a motion for preliminary approval on January 26, 2026. The court has not yet issued a preliminary approval order.
• The final approval (fairness) hearing is scheduled for June 17, 2026. The opt-out and objection deadline is May 27, 2026.
• Unlike most settlements, no claim form is required — eligible class members who do not opt out will receive payments automatically after final approval and resolution of any appeals.

What Is the Interactive Brokers Lawsuit About?

Interactive Brokers LLC operates one of the largest online brokerage platforms in the United States. When a customer’s margin account falls below the required equity level, Interactive Brokers uses automated software to liquidate positions in that account. 

Plaintiff Robert Scott Batchelar — a retail trader and margin account holder — filed the original lawsuit in December 2015, alleging that this auto-liquidation software contained design flaws that caused his account positions to sell at prices worse than what the software’s own parameters authorized.

The lawsuit claimed that the software executed liquidation trades outside a defined “pricing corridor” — meaning the actual sale price was less favorable to the customer than the price the system should have permitted. Batchelar alleged this caused him, and thousands of other customers, to suffer greater financial losses than they would have under a properly functioning system. The case traveled all the way to the Second Circuit Court of Appeals before returning to the District of Connecticut for trial-level proceedings.

The lawsuit, Batchelar v. Interactive Brokers LLC, et al., Case No. 3:15-cv-01836, is pending in the U.S. District Court for the District of Connecticut. Interactive Brokers denies all wrongdoing. After more than a decade of litigation, the parties agreed to settle to avoid the further costs and uncertainty of trial.

Who Is Eligible to File a Claim?

The settlement class covers retail margin traders at Interactive Brokers with accounts that the automated software liquidated at prices outside the defined pricing corridor. Specifically:

• You may qualify if you are a U.S. resident who held a margin account with Interactive Brokers LLC at any time between December 18, 2013, and July 14, 2025.
• You may qualify if Interactive Brokers’ automated liquidation algorithm software executed at least one trade in your account where the actual execution price produced a ratio of margin improvement to cost outside the corridor defined by the court’s class certification order.
• You may qualify if Interactive Brokers notified you that you are a settlement class member, or if your account records match the class definition.
• You do not qualify if you are an officer, director, or legal representative of the defendants, or a judge or immediate family member of the judge assigned to this case.

If you are unsure whether your account qualifies, contact the settlement administrator at (833) 647-9087 or [email protected].

Related article: RFK Racing Data Breach Settlement, Are You Eligible for Up to $2,500?

How Much Can You Receive?

The $5,000,000 total settlement fund covers all costs before payments reach class members. The fund breaks down as follows:

• Attorneys’ fees: Up to $1,650,000
• Attorneys’ litigation expenses: Up to $1,700,000
• Service award to class representative: $100,000 total
• Settlement administration costs: TBD
• Payments to eligible class members: Remainder of the fund after above deductions

After deductions, the net fund available to class members could be approximately $550,000 or less, divided pro rata among all eligible class members based on the amount of their losses caused by the faulty algorithm trades. The exact payout per person is TBD and depends on the total number of qualifying class members and the size of each individual’s eligible losses.

One important difference from most settlements: you do not need to file a claim form to receive a payment. Every eligible class member who does not opt out will receive an automatic distribution. Class members may update their contact information or choose a payment method through the settlement administrator’s website.

This automatic-payment structure is similar to what retail investors saw in the Rivian $250M securities class action settlement — where class members received distributions based on their calculated losses without needing to take action.

How to Receive Your Payment

Because no claim form is required, the process is simpler than most settlements. Here is what eligible class members need to do:

Step 1 — Confirm your eligibility. Check whether your Interactive Brokers margin account had positions liquidated by the auto-liquidation software between December 18, 2013, and July 14, 2025. Review any notice you received from Interactive Brokers or the settlement administrator.

Step 2 — Update your contact information if needed. Visit InteractiveBrokersSettlement.com or contact the administrator at (833) 647-9087 to ensure the settlement administrator has your current mailing address and contact details.

Step 3 — Select your preferred payment method (if offered). The settlement administrator may allow class members to choose between check, ACH transfer, or another payment form. Check the official website for available options.

Step 4 — Decide whether to opt out. If you want to preserve your right to sue Interactive Brokers independently over these claims, you must submit a written opt-out request postmarked by May 27, 2026. Mail it to: Interactive Brokers Software Settlement, ATTN: Exclusion Request, c/o Settlement Administrator, P.O. Box 25226, Santa Ana, CA 92799-9958.

Step 5 — If you object to the settlement terms, file a written objection with the court by May 27, 2026. Attending the final approval hearing on June 17, 2026 is optional.

Step 6 — Wait for final court approval. After the fairness hearing on June 17, 2026, and after any appeals resolve, the administrator will distribute payments automatically to all eligible class members.

Estimated time to update contact info: Under 5 minutes online.

Important Deadlines & Dates

Milestone	Date
Original Lawsuit Filed	December 18, 2015
Class Certified	August 25, 2023
Settlement in Principle Reached	August 15, 2025
Motion for Preliminary Approval Filed	January 26, 2026
Preliminary Approval Granted	TBD
Opt-Out Deadline	May 27, 2026
Objection Deadline	May 27, 2026
Final Approval (Fairness) Hearing	June 17, 2026
Expected Payment Date	TBD — after final approval and resolution of any appeals

Frequently Asked Questions

Do I need a lawyer to receive my Interactive Brokers settlement payment?

 No. Class Counsel already represents all class members at no cost. Payments distribute automatically to eligible members who do not opt out. If you have unusually large losses and want to preserve your individual lawsuit rights, consult an attorney before the May 27, 2026 opt-out deadline.

Is the Interactive Brokers $5 million settlement legitimate? 

Yes. This is a court-supervised class action in the U.S. District Court for the District of Connecticut, Case No. 3:15-cv-01836. The official website is InteractiveBrokersSettlement.com, administered by Simpluris. Contact the administrator directly at (833) 647-9087.

When will I receive my Interactive Brokers settlement payment? 

Payments go out after the court grants final approval at the June 17, 2026 fairness hearing and after any appeals resolve. Check InteractiveBrokersSettlement.com for updates on the payment schedule.

What if I missed the opt-out deadline?

 If the May 27, 2026 deadline passes without action, you remain automatically part of the settlement class. You receive a payment if eligible, but you give up your right to sue Interactive Brokers, Interactive Brokers Group Inc., and Thomas A. Frank separately over these claims.

Will my settlement payment affect my taxes? 

It may. Payments that compensate for investment losses may reduce your cost basis or be treated as ordinary income, depending on how the IRS characterizes the payment. Consult a tax professional for guidance specific to your trading account and situation.

Do I need to file a claim form to receive a payment? 

No. All eligible class members who do not opt out receive payments automatically after final court approval and resolution of any appeals. Update your contact information with the settlement administrator at InteractiveBrokersSettlement.com to ensure your payment reaches you.

What is the pricing corridor and how do I know if my account qualifies?

 The pricing corridor is a technical parameter in Interactive Brokers’ auto-liquidation software that defined the acceptable price range for liquidation trades. The court defined class membership as accounts where the software executed trades outside that corridor. If you held a margin account with Interactive Brokers liquidated between December 18, 2013, and July 14, 2025, contact the administrator at (833) 647-9087 to confirm your eligibility.

How much will each class member receive? 

The exact per-person amount is TBD. After attorneys’ fees of up to $1,650,000, expenses of up to $1,700,000, a $100,000 service award, and administration costs, the remaining net fund distributes pro rata based on each eligible class member’s calculated losses. The final amount depends on total eligible losses across all class members. For comparison, the Catalent $78M securities class action settlement also used a pro rata structure where per-share payouts varied based on total claims volume.

Sources & References

• InteractiveBrokersSettlement.com — Official Settlement Website
• CourtListener — Batchelar v. Interactive Brokers LLC, Case No. 3:15-cv-01836 (D. Conn.)
• SEC EDGAR — Interactive Brokers Group 10-K, Annual Report (Dec. 31, 2025)

Last Updated: March 22, 2026

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Legal claims and outcomes depend on specific facts and applicable law. For advice regarding a particular situation, consult a qualified attorney.