(CN) – A federal appeals court in Washington, D.C., dismissed a lawsuit pinning negligence claims on the National Association of Securities Dealers for hiring a private tech company that botched the scores of thousands of Series 7 exams.
The exam, required for anyone in the securities industry, randomly draws 250 questions of varying difficulty from a larger pool. The association hired Electronic Data Systems to develop a software program that scores the exams, adjusting for level of difficulty, and reports the results to each applicant.
Sometime before October 2004, an EDS technician inadvertently switched some of the difficulty variables for 213 questions, which were then added to the question pool. By the time the mistake was discovered in December 2005, 60,500 applicants had taken the test. The association acknowledged that the scores of 1,882 applicants had mistakenly been reported as failing and corrected the error.
But applicants who received incorrect Series 7 scores filed a class action for breach of contract, negligence and negligent misrepresentation.
The district court dismissed the lawsuit, noting that the plaintiffs sought remedies for the alleged negligent performance of a self-regulatory organization that “Congress did not see fit to provide.”
The D.C. Circuit agreed.
“The district court did not buy it,” Judge Brown wrote. “Neither do we.”