Legal Question in Investment Law in Ohio
Trading on Margin
Can an online broker like Etrade be held liable if they allowed you to purchase stock on margin that they had listed as a non marginable secruity. Etrade had FNM (Fannie Mae) listed as a non-marginable secruity but they allowed me to purchase 20,000 shares after hours on Sept. 5th at an average price of about $6.75 and when it opened for trading on Sept. 8 after the Government took them over, Etrade sold all my shares at $1.18 due to a margin call. This resulting in me losing over $40,000 of my money plus I now owe them over $63,000 in my margin account. If they would have prohibited me from buying this secruity using margin funds, I would still have about $5,000 of my own money and I wouldn't owe them any margin funds.
1 Answer from Attorneys
Re: Trading on Margin
Please answer the following questions directed to my office email address so I can advise you further.
1. Did ETrade solicit the trade through an ETrade broker?
2. Can you provide us with a copy of your new account application?
3. Do you have a history of buying speculative securities and/or have you ever had an account where you purchased on margin?
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