Seven Points Capital is furnishing this document to you to provide
some basic facts about purchasing securities on margin, and 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 Seven Points Capital. Please consult
a Seven Points Capital representative regarding any questions or
concerns you may have with your margin account.
When you purchase securities you may pay for the securities in full
or you may borrow part of the purchase price from Seven Points Capital
If you choose to borrow funds from Seven Points Capital you will open a
margin account. The securities purchased are Seven Points Capital'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, Seven Points Capital can take action such as
issue a margin call and/or sell securities in your account 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, including:
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 in
your account.
The firm can force the sale of securities in your
account
If the equity in your account falls below the maintenance margin
requirements under the law or the firm's higher "house"
requirements, the firm can sell the securities in your account to cover
the margin deficiency. You also will be responsible for any shortfall in
the account after such a sale.
The firm can sell your securities 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
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.
You are not entitled to choose which security in
your account should be liquidated 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
interests.
The firm can increase its "house"
maintenance margin requirements at any time
The firm 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 the member to liquidate or sell the
securities in your account.
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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