Margin Risk Disclosure
The following information is to notify you of some basic facts about purchasing securities on margin and to alert you to the risks involved with trading securities in a margin account.
Before trading in a margin account, you should carefully review your Customer Agreement, including the disclosure statements. If you have any questions, please contact GTN at email@example.com.
Risks of Borrowing on Margin
It is important that the risks involved in trading securities on margin are fully understood. Because it involves an extension of credit, it may not be appropriate for all investment objectives.
- You can lose more funds than you deposit in a margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to avoid the forced sale of those securities or other securities in your account.
- GTN can force the sale of securities or other assets in your account(s). GTN can sell the securities in any of your accounts to cover a margin deficiency when the equity in your account falls below the margin maintenance requirements. The Federal Reserve Board establishes initial margin requirements and FINRA establishes the maintenance requirements; higher house maintenance requirements also may be established by GTN. You will also be responsible for any shortfall in the account after the sale.
- GTN can sell the securities in your account(s) without notice. Some investors mistakenly believe that a firm must contact them for a margin call to be valid and that the firm cannot liquidate securities in their accounts to meet the call unless the firm has contacted them first. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.
- GTN chooses which securities in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, GTN has the right to decide which security to sell in order to protect its interests.
- GTN can increase its “house” maintenance margin requirements at any time and is not required to provide you with advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause GTN to liquidate or sell securities in your account(s).
- You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.
- Voting Loss – GTN may lend your shares in a margin account to other customers or broker-dealers. When shares are lent, voting rights may be lent along with the shares. If a corporate vote takes place while your shares are on loan, you may be unable to vote those shares. Additionally, while shares are lent, you may receive a substitute payment in the form of cash in-lieu of dividends. While this cash payment is in an amount identical to the qualified dividend, it is not a dividend for tax purposes and must be reflected on a year-end statement as ordinary income.
If you have any questions about this policy, please write, call, or email us.
4509 Creedmoor Road, Suite 201
Raleigh, NC 27612 United States
Call us: +1 332 230 1184