What is Excessive Use of Margin?
Excessive use of margin occurs when a broker uses excessive margin to purchase securities in a customer’s account. When an investor purchases an investment partially with their own money and partially with money borrowed from their brokerage firm, the borrowed amount is called margin and the investment becomes collateral for the loan.
Using margin to buy investments is very risky because if the investment declines in value and the account reaches a certain threshold, then the investor could be forced to sell out at the least advantageous time. So, the investor could lose all of the money he or she put in as well as having to repay the loan plus interest.
If you have suffered investment losses, then Galvin Legal may be able to help you recover your losses in a Financial Industry Regulatory Authority (“FINRA“) arbitration claim. For a Free Consultation with a securities attorney, call Galvin Legal at 1-800-405-5117.