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Some Basic
Facts...
Wang Investment Associates, Inc. is
furnishing this document to you to provide 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 stocks in a margin account, you should
carefully review the margin agreement provided by your firm.
Consult your firm regarding any questions or concerns you may
have with your margin accounts. |
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Margin Disclosure
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When you purchase securities,
you may pay for the securities in full or you may borrow
part of the purchase price from your brokerage firm. If
you choose to borrow funds from your firm, you will open a
margin account with the firm. The securities purchased
are the firm's collateral for the loan to you. If the
securities in your account decline in value, so does the
value of the collateral supporting your loan, and, as a
result, the firm can take action, such as issue a margin
call and/or sell securities or other assets in any of your
accounts held with the member, in order to maintain the
required equity in the account.
It is important that you fully understand the risks
involved in trading securities on margin. These risks
include the following:
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You can lose more funds than
you deposit in the margin account.
A decline in the value of securities that are purchased
on margin may require you to provide additional funds to
the firm that has made the loan to avoid the forced sale
of those securities or other securities or assets in
your account(s).
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The firm can force the sale of
securities or other assets in your account(s).
If the equity in your account falls below the
maintenance margin requirements or the firm's higher
"house" requirements, the firm can sell the securities
or other assets in any of your accounts held at the firm
to cover the margin deficiency. You also will be
responsible for any short fall in the account after such
a sale.
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The firm can sell your
securities or other assets without contacting you.
Some investors mistakenly believe that a firm must
contact them for a margin call to be valid, and that the
firm cannot liquidate securities or other assets in
their accounts to meet the call unless the firm has
contacted them first. This is not the case. 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.
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You are not entitled to choose
which securities or other assets in your account(s) are
liquidated or sold to meet a margin call.
Because the securities are collateral for the margin loan,
the firm has the right to decide which security to sell in
order to protect its interest. |
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The firm can increase its "house"
maintenance margin requirements at any time and is not
required to provide you 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 the member to liquidate or sell
securities in your account(s).
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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.
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