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Margin Disclosure Statements to be Issued to Customers
The SEC has approved the NASD rule proposal requiring brokerage firms to deliver to all non-institutional customers a statement detailing the operation of margin accounts and the risks of using margin.
Brokerage firms will disclose the following risks associated with buying on margin:
You can lose more funds than you deposit in the margin account;
The firm can sell your securities or other assets without contacting you;
You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call;
The firm can increase its "house" maintenance requirements at any time and is not required to provide you advance written notice; and
You are not entitled to an extension or time on a margin call.
Source: NASD Notice to Members 01-31
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Sponsored by James J. Eccleston, an attorney representing stockbrokers, financial planners and
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Always consult an attorney and/or investment advisor when building and protecting your wealth.
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