Margin Abuse Law Firm

Florida Investor Sues TD Ameritrade For $5 Million in Losses. Our Skilled Margin Abuse Law Firm Are Representing This Claimant

A Fort Lauderdale, Florida investor who was trading options using TD Ameritrade’s platform has filed a seven-figure lawsuit against the broker-dealer. This investor contends that margin abuse, including raising the margin requirement on one of his investments by 500%, essentially wiped out his account immediately and unnecessarily.  Now, this investor is seeking up to $5 million in damages for his losses.

The Shepherd Smith Edwards and Kantas Margin Abuse Law Firm (investorlawyers.com) is representing this investor in his FINRA lawsuit against TD Ameritrade. Incredibly, it appears that for most of the options contracts he secured through the broker-dealer’s platform, he was either the only one, or one of the very few, with these options contracts.

This purportedly would have been something that TD Ameritrade was aware of, and the firm should have known that raising the margin requirement and forcing someone to close out positions where that investor was essentially the only party in the market for those securities would result in horrible prices.

In his investment loss recovery claim, this investor alleges that TD Ameritrade targeted and forced him—and likely only him—to close these positions in a purported margin abuse scam. The result has been the decimation of this investor’s life savings. Given that our client suffers from chronic health issues, making it challenging for him to bring in a solid income outside of these investments, the outcome is even more devastating.

In his broker fraud lawsuit, this investor is also alleging fraud, bad faith decisions, breach of contract, deceptive trade practices, misrepresentations and omissions, breach of fiduciary duty, negligence, gross negligence, failure to supervise, and more.

Why Margin Abuse Leads to Serious Investor Losses

Margin trading typically involves borrowing money from a broker-dealer. Normal margin rules allow an investor to borrow up to 50% of a security when buying it, which means the investor only has to put up 50% of their own money to pay for the security.

However, if the underlying value of the security drops below a certain point—usually 30% of equity—the broker-dealer can issue a margin call. At this point, the investor must either sell the securities or deposit more money so that the account is restored to margin compliance.

Unfortunately, if an investor does not have the funds needed to fulfill the margin call, the firm is allowed to sell the securities to meet the call. This usually involves distress pricing, which can result in less proceeds to cover the loan. Not only that, but the investor must repay whatever is owed even after sustaining serious losses.

Brokerage firms have a responsibility to fully apprise investors of the risks they are taking with options trading and borrowing on margin. This type of investing often results in high commissions and fees for financial advisors, which can compel some of them to ignore an investor’s best interests and unsuitably recommend margin account use or allow trading the firm knows is not advantageous for the customer. Options trading and borrowing on margin are generally unsuitable for novice investors.

The Shepherd Smith Edwards and Kantas Margin Abuse Law Firm are highly knowledgeable regarding how margin abuse can lead to serious investment losses. We are seasoned securities attorneys who use that experience to hold brokerage firms liable for investors’ wrongful losses.

With more than a century’s worth of combined experience in securities law and the securities industry, we have represented investors in even the most complex kinds of broker fraud cases. More than 90% of our clients have received full or partial financial recovery with our help.

How To Contact Our Margin Abuse Attorneys

Call (800) 259-9010 today or schedule your free, initial case assessment online.