& Co. Inc. (Oppenheimer) is
furnishing this document to you in order 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. Consult your
Financial Advisor regarding any questions or concerns you
may have with your margin accounts.
you purchase securities, you may pay for the securities in
full or you may borrow from Oppenheimer part of the purchase
price. If you choose to borrow funds from us, you will need
to open a margin account. The securities purchased are the
firm’s collateral for our loan of funds 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, and sometimes must, take action, such as issue a margin
call, and/or sell securities or other assets in any of your
accounts held at Oppenheimer, in order to maintain the required
equity in the account relative to the value of the account
and the amount borrowed.
It is important that you fully understand the risks involved
in trading securities on margin. These risks include the following:
can lose more funds than you deposit in the margin account.
decline in the value of securities that are purchased
in your margin account may require you to deposit additional
funds into your Oppenheimer account in order to avoid
the forced sale of those securities or other securities
or assets in your account(s).
firm can force the sale of securities or other assets
in your account(s).
the equity in your margin account falls below the maintenance
margin requirements or the firm’s higher “house” requirements,
the firm can sell, at its sole discretion, 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.
firm can sell your securities or other assets without
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.
are not entitled to choose which securities or other
assets in your account(s) are liquidated or sold to
meet a margin call.
the securities are collateral for the margin loan, the
firm has the right to decide which securities to sell
in order to protect its interest.
firm can increase “house” maintenance margin requirements
at any time and is not required to provide you advance
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 Oppenheimer
to liquidate securities in your account(s).
are not entitled to an extension of time on a margin
an extension of time to meet margin requirements may
be available to customers under certain conditions,
a customer does not have the right to an extension of
firm may lend or hypothecate securities in your margin
a debit balance exists in your margin account, the firm
may, within the limitations imposed by applicable law,
pledge, repledge, hypothecate or rehypothecate, securities
in your margin account(s). In this event, your ability
to exercise certain attendant rights of ownership with
respect to such pledged or hypothecated securities,
including, without limitation, the exercise of any voting
rights, may be limited. Additionally, you will be at
risk of losing your qualified dividend status and consequently,
any preferential tax rates on dividends.