Sarasota County Bar Association
Manatee Chamber of Comerce

Excessive Margin

Did your broker take out a large margin loan in your account, creating a large loss when the trade moved against him? Your broker may have used excessive margin, and you may be able to recover your losses.

Excessive Margin Explained

Brokerage firms allow their clients to borrow money in their trading accounts to purchase securities, using the paid securities in the account as collateral. This increases investor risk substantially because the client is liable for the full purchase price of the security plus interest, even if the value of the security declines.

What’s the Rule?

Stock brokers are responsible for knowing their clients and assessing their risk profile. Excessive margin is an example of how stock brokers take on too much risk on behalf of their clients, creating losses from inappropriate investments.

If your stock broker purchased stocks using margin and this was inappropriate for your risk profile, you may be able to recover your losses. Talk to our team at Gucciardo Law for a free case assessment.

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