An arbitration panel for the Financial Industry Regulatory Authority (“FINRA”) has entered a $4.6 million award against Interactive Brokers and Charles Schwab in a case brought by over two dozen customers who claimed breach of contract and unsuitable investment strategies by the firms.

The customers claimed that Interactive Brokers and Charles Schwab engaged in a “high frequency trading strategy in unspecified securities within [the] Claimants’ retirement accounts.”

A panel of FINRA arbitrators found the firms liable and ordered Interactive Brokers to pay $2.7 million in compensatory damages and $984,356 in attorneys’ fees, plus interest, and ordered Charles Schwab to pay $606,807 in compensatory damages and $328,118, plus interest. The panel also assessed each firm with $23,100.00 of hearing session fees.

The firms have appealed the award, claiming lack of responsibility for oversight of the financial advisor who made the trades at issue in the claim. The firms also claim that the arbitrators failed to consider relevant evidence and that one of the arbitrators was biased against the respondents. Overturning an arbitration award is a highly difficult legal standard to meet and the firms are unlikely to prevail absent clear evidence of a direct and provable bias by one of the panelists.

Investment News quotes the Claimants’ attorney as stating that the firms failed to warn the claimants about red flags within the customers’ accounts and violated the customers’ right to be informed of important information regarding their accounts.