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Gold/Mining/Energy : Solv Ex (SOLVD)
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To: Dominic Cerino who wrote (3265)6/4/1997 10:36:00 PM
From: JJB   of 6735
 
Dominic

Received some responses to regarding disposition of stock shares held by one of the brokerage firms I use.

In response to your question, if the shares are not in a margin account than they are not being loaned out by Schwab to other customers to short sell those shares. We apologize for any previous confusion you may have experienced with this question.

Second response

In response to your further inquiry, a Margin and Short Account agreement is signed when an margin account is established. This agreement can either signed on the regular account application or a separate application if a brokerage account was previously established without a margin feature. The Margin and Short Account agreement is a consent that the account holder agrees that securities held on the Margin side of the brokerage account may be borrowed by Schwab acting as principle.

Please be advised that when a Schwab brokerage account with a margin feature is opened, the account is separated into two subaccounts within the Schwab host system. The Cash side of the account holds cash and securities which are not eligible for margin trading. The account holder can request securities which are eligible for margin trading to be held on the non-margin side of the account.

If you have a Schwab Brokerage account with a margin feature but the stock is held on the non-margin side of the account, then the stock will not be borrowed against by Schwab.

The Margin side of the account will hold marginable securities which can be borrow against. The account holder may use the value of marginable securities to borrow against in order to purchase other securities.

If you wanted to establish a brokerage account but did not want the securities borrowed against, you may establish a Schwab brokerage account with out a margin feature. This would be considered a Cash Only brokerage account.

For your review, we have mailed you an information packet regarding Margin and Short trading. This information packet will list the details regarding securities borrowed for short trading.

We hope this response answers your question regarding margin accounts.

Now that I am starting to reread brokerage agreements I am seeing that under any form of margin agreements if I dispute under a margin account I pay brokerage firm "reasonable attorney fees".

Going cash accounts tomorrow anybody else know how their account agreements handle these issues?

jjb
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