Interactive Brokers is off the hook for a massive local investment disaster, after the Ohio Supreme Court ruled yesterday 6-1 that the online brokerage firm cannot be held liable under Ohio securities law for roughly $25 million lost by 21 Cleveland-area investors in the Epitome Investment Fund. The decision wipes out a win the investors briefly had at the Eighth District Court of Appeals and restores the trial court's dismissal of their case.
Writing for the majority, Justice Megan E. Shanahan homed in on a key phrase in R.C. 1707.43(A): liability for those who participate "in making such sale." To sue under that statute, the court said, investors must point to specific conduct that actually helped bring about the sale to the purchaser. "A connection to a broader investment scheme or transaction is not enough, the statute demands involvement in the sale to the purchaser," the opinion stated, according to the Supreme Court of Ohio.
The investors say fund manager Constantine Antonas created Epitome in 2015 and raised about $25 million from members of the Northeast Ohio Greek-American community, only to lose the money in speculative trades. Antonas died in 2021, and the investors filed suit soon after. They alleged that a private placement memorandum identified Interactive Brokers as the fund's broker and that the firm failed to act on warning signs as the account unraveled, according to Cleveland.com.
What the court found
Shanahan's opinion zeroed in on what counts as participation "in making such sale" and drew a firm line between selling investments and servicing them afterward. Routine postsale work like opening accounts, executing trades, and carrying out compliance and monitoring functions did not, in the court's view, amount to helping sell Epitome interests to the investors in the first place. Because the investors' amended complaint focused largely on those post-sale brokerage activities, the court concluded the pleading did not state a valid claim and that the trial court correctly dismissed the case, as explained by the Supreme Court of Ohio.
Dissent and the plaintiffs' options
Justice Jennifer Brunner saw things very differently. In a lone dissent, she argued the case should have moved into discovery so a jury could decide whether any missteps by Interactive Brokers' compliance operations helped Antonas sell fund interests. Brunner cautioned that the majority's strict reading of the statute could make life harder for people burned by fraudulent investments. She wrote that "unfortunately, the majority opinion has adopted a reading of R.C. 1707.43(A) that is wildly untethered to its text," according to Cleveland.com.
Why it matters in Cleveland
The ruling leaves the 21 local investors without the rescission remedy they were chasing from the brokerage firm and tightens how Ohio courts are likely to apply the state's Blue Sky law to middlemen and intermediaries. The plaintiffs can still pursue other claims against Antonas's estate, look for settlements, or test out different legal theories, but the state's highest court has now made clear that a direct role in the sale itself is the key hurdle they have to clear.
The full opinion was released yesterday and both lawyers and investors are now watching to see whether the decision sparks any fresh filings or quietly nudges the parties toward settlement talks.
