Margin Abuse Attorneys

Are You An Investor Who Suffered Losses Due To Margin Blowout? Our Margin Abuse Attorneys Want To Talk To You

If you are an investor who suspects that broker misconduct was a factor in your margin loss claim, contact Shepherd Smith Edwards and Kantas Margin Abuse Attorneys (investorlawyers.com) today. We are looking into claims that may have involved your financial advisor selling out your account positions to satisfy your margin calls.

Having a margin account lets you borrow money from your broker-dealer, which gives you more money to invest. However, you will have to pay back that money. While brokerage firms are entitled to liquidate investors from various positions to meet margin calls, there may be instances in which grounds for a broker negligence claim may be warranted. For example, if your broker-dealer told you that there was time to meet margin calls but then sold your positions before that time had passed, misrepresentations and omissions may have occurred.

What Is A Margin Blowout? 

This refers to when an investor’s margin account has to be liquidated because of a margin call. Margin rules require a customer to  pay for a security or place sufficient collateral in a margin account to obtain a loan from a brokerage firm for making that purchase. If the customer does not put up enough capital by the time required, the brokerage firm can sell a customer’s investment so as to meet margin requirements. However, this can lead to serious investor losses.

It is not uncommon for brokers to fail to properly explain to a customer what having a margin account involves, including that stocks used as collateral could be liquidated to satisfy margin calls. It is one of the reasons why margin accounts should not be unsuitably recommended to retail investors, conservative retirees, or inexperienced investors. Margin accounts, depending on the terms, may even be unsuitable for certain accredited or sophisticated investors.

You want to work with seasoned margin blowout loss lawyers who understand what having a margin account entails and how broker misconduct or negligence involving margin abuse can occur. These can be complex investment recovery claims and you will likely have to sue your brokerage firm in FINRA arbitration.

Margin investing can lead to significant returns but it can also increase the risk of greater loss. With margin accounts, interest is typically charged to the account. That is also something that not all margin account investors may understand.

 Other risks that can occur with margin investing:

• The possibility of losing more than you invested.
• Your financial advisor is allowed to sell your security positions to satisfy margin calls without letting you know first.
• You may have to put in more money or securities to satisfy margin calls.
• You might not be able to ask for more time in the wake of a margin call being made.
• Margin account management fees can grow over time.
• Your broker-dealer gets to choose which assets to use to satisfy a margin call.

Margin accounts continue to be attractive and profitable for broker-dealers. Not only are there typically high management fees, but also the margin interest charged can be a significant moneymaker for financial advisors.

How Can Our Margin Abuse Attorneys Help?

We cannot tell you how many investors with margin accounts have come to us over the years saying they were blindsided by the risks involved and that they had no idea they could sustain such serious losses. Shepherd Smith Edward and Kantas Margin Abuse Attorneys have the skills, resources, and knowledge to reparent clients with this type of complex claim while maximizing your chances for financial recovery.

But first, contact us today to request your free, initial case consultation. You can also call (800) 259-9010.