Shepherd Smith Edwards & Kantas LLP Investigating Claims Of Investors Auto-Liquidated From A Securities-Based Line Of Credit

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Dec 12, 2018, 20:28 ET

HOUSTON, Dec. 12, 2018 /PRNewswire/ -- Lawyers with the Securities Law Firm of Shepherd Smith Edwards & Kantas LLP, www.sseklaw.com, are investigating claims of investors who suffered losses as a result of a liquidation of their account which served as collateral for a securities based line of credit (SBL). Many brokerage firms have begun encouraging clients to borrow money from the firm itself, rather than withdrawing money from the account, or seeking financing through more traditional methods like lines of credit with a bank or home equity loans.

While these loans may be appropriate under some circumstances, many clients take these loans without understanding the unique risks that come with it. The brokerage firm is using the securities in the account as collateral against the loan. As a result, if the value of those investments fall, the firm may decide that there is no longer enough collateral to cover the loan, and may require either additional funds to be deposited, or it may sell securities in the account to pay back the loan. If the firm does liquidate to cover the loan, it is necessarily selling in a down market. Sometimes the first round of liquidations actually make the collateral requirements worse, resulting in yet more liquidations which can ultimately devastate an account. Obviously these risks need to be carefully weighed when deciding whether or not to use this sort of non-traditional lending.

Unfortunately, some brokers talk clients into doing these loans rather than seeing assets moved away from the firm, even when it is clearly inappropriate. If you or someone you know believes they were inappropriately recommended to use a securities based line of credit and suffered losses as a result of a liquidation or margin call, contact the law firm of Shepherd, Smith, Edwards & Kantas LLP for an evaluation of the account to determine if there might be a claim to attempt to recover some or all of the losses. All communications will be kept strictly confidential, and you will not be billed in any way for the consultation. Shepherd Smith Edwards & Kantas LLP has a team of attorneys, consultants and staff with more than 100 years of combined experience in the securities industry and in securities law.

Contact Info: 866-377-2529

Ryan Cook [email protected]

Kirk Smith [email protected]

SOURCE Shepherd Smith Edwards & Kantas LLP