Legal Question in Securities Law in New Jersey
Liquidation Question
Does a broker / dealer have the right to liquidate securities in my account to cover a past-due account fee? There is no discretionary, margin contract at all. The only document I signed to open the account was a W-9 form.
Asked on 12/19/01, 2:10 pm
1 Answer from Attorneys
Nicholas Guiliano
Arbitration, Securities & Investment Fraud Lawyer
Re: Liquidation Question
Good Question, the brief answer is NO! They only have the right to liquidate by contact, i.e. a margin contract gives them complete discretion. Here, you say, there is no such agreement. Read your customer agreement. Unless it gives them that right, they cannot. However, your damages will be limited to the time you knew you did not own the stock. You know you do not own it, and you must buy it back if you want consequential damages after you knew.
Answered on 12/19/01, 2:39 pm
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