Trading on margin is something that investors can do with their brokerage firm. However, not all stockbrokers inform their clients of the risks that come with margin trading, and when you suffer considerable losses due to misrepresentation or stockbroker misconduct, you may be entitled to financial compensation.
Continue reading to learn more about what it means to trade on margin and how you can pursue an arbitration complaint against your financial advisor.
What Does It Mean to Trade on Margin’?
Trading on a margin means that you are able to purchase additional stock through a loan issued by the brokerage firm. This gives the investor an opportunity to engage in trades they may not have had to capital to engage in prior to the margin trade. You are using your stock as collateral for the loan, which makes trading on margin particularly risky due to the volatility of the stock market.
If the brokerage firm issues a margin call, which demands that you increase the value of your portfolio in order to offset the diminished value of the trades you purchased on margin, the brokerage firm can then sell your stock in order to make up the value.
Recovering Losses from Unsuitable Margin Trading
Margin trading is not illegal or frowned upon, but it may not be suitable for everyone. Furthermore, if your broker failed to inform you of the risks associated with trading on margin, you may be able to get your money back.
The Financial Industry Regulatory Authority (FINRA) is responsible for handling complaints of this nature, and may be able to order that your financial advisor compensate you when you suffer considerable losses due to trading on margin.
Discuss Your Case with an Experienced Investment Loss Lawyer
If you are interested in further discussing the details of your unsuitable margin trading case with a dedicated investment loss lawyer at Wolper Law Firm, reach out to our office to schedule a free, no-obligation consultation. You can give us a call at 800.931.8452 or submit the convenient contact form included below so we can get started on your FINRA arbitration complaint.