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Strategies & Market Trends : Margin Calls - Share The Pain
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To: daffodil who started this subject12/2/2000 11:24:32 PM
From: daffodil   of 158
 
Another fact not realized by many margin investors is that many, if not most, brokerage firms' margin agreements give them the right to use assets in your other accounts to fulfill any unpaid debit balances in your margin account.

In other words, if the short sales or naked options in your margin account blow up, leaving you with negative equity, and you don't pay the debt, the firm may have the right to transfer assets from any or all of your other accounts (including joint accounts and your IRA account).

This affects traders who are engaging in strategies that can cause a loss of more than 100% of equity. If you are, check your margin agreement to see if the one you signed includes these broad powers. If it does, consider whether it is prudent for you to have other accounts at the same firm.
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