HII have a brokerage account which is on portfolio margin. As part of my account agreement, the overall portfolio has to be relatively neutral to the market - (ie - a short of 1000 shares of SPY at $100 would go towards $100,000 as a short,etc) Everyday, my portfolio is looked at by an algorithm, which compares my long and short positions, which have always been well within the range of neutral. Recently however, I purchased a significant amount of a security which i deemed to be a long security but for which the algorithm deemed a short security, which triggered a risk margin call. When i notified the broker that i thought the calculation was wrong, they disagreed and said they were counting it as a short security and if i didnt liquidate that or another short security, they would force liquidation upon me. Importantly, this was NOT a reg-T call, this was only an internal risk call. Also, the broker has NO DOCUMENTATION to show how they determine what is long or short, thus, it is the judgement of one person. Street convention at large brokers show this security (albeit a bit esoteric) to be a LONG SECURITY but the broker has stuck to their guns and forced liquidationSince the liquidation, the value of the security has increased by almost 50% - do i have the right to sue the broker for the damages for the liquidation, or can they make up whatever rules they wish if they are the ones extending the margin??
State/Country relating to question: New York
i need someone with more expertise in the area...you are not FINRA qualified
DISCLAIMER: Answers from Experts on JustAnswer are not substitutes for the advice of an attorney. JustAnswer is a public forum and questions and responses are not private or confidential or protected by the attorney-client privilege. The Expert above is not your attorney, and the response above is not legal advice. You should not read this response to propose specific action or address specific circumstances, but only to give you a sense of general principles of law that might affect the situation you describe. Application of these general principles to particular circumstances must be done by a lawyer who has spoken with you in confidence, learned all relevant information, and explored various options. Before acting on these general principles, you should hire a lawyer licensed to practice law in the jurisdiction to which your question pertains.
The responses above are from individual Experts, not JustAnswer. The site and services are provided “as is”. To view the verified credential of an Expert, click on the “Verified” symbol in the Expert’s profile. This site is not for emergency questions which should be directed immediately by telephone or in-person to qualified professionals. Please carefully read the Terms of Service (last updated February 8, 2012).