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Recovering Losses caused by Investment Misconduct

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Ohio Margin Investing: Managing Risks and Recoveries

Margin investing can result in significant gains, but it comes with significant risks. In order to understand whether margin investing is for you, or whether you have been the victim of an investment scam, you need to understand what margin investing is and what risks you face. Additionally, it is important to know how and when to contact a Columbus investment fraud attorney for help.
What is Margin Investing?
Margin investing begins with a margin account held by a brokerage firm. The brokerage firm loans money to an investor so that the investor may purchase more of the investment. The amount loaned could be up to 50% of the total investment cost. From the investor’s point of view, margin investing is potentially advantageous because it may increase the financial gain on the investment. From the brokerage firm’s point of view, margin investing is advantageous because it earns interest on the money lent to the investor.
What Risks Should Be Disclosed?
Despite the potential benefits to investors, there are risks. The risks of margin investing include:
  • Losing More Money Than You Invested. Not only may you lose the money that you put into the investment, but you may have to pay back the money you borrowed to purchase the investment.
  • You Have Little Control Over Your Own Investment. The security is collateral for the loan you took from the brokerage firm to purchase the investment. Thus, the brokerage firm has considerable say in what you do with the security, and you may not be able to sell it when you want to do so.
  • The Costs May Be High. You may need to pay interest costs on the money borrowed and fees and commissions in addition to other costs.
Brokers have a responsibility to disclose these risks to investors.
How and When Should I Contact a Columbus Investment Fraud Attorney?
If a broker failed to disclose these risks to you, made an unsuitable investment recommendation for you, or invested without your permission, then it is important to contact an experienced Columbus investment fraud lawyer as soon as possible.
The Ohio investment fraud law firm of Meyer Wilson is exclusively dedicated to helping investors. We encourage you to read our FREE book Five Signs of Investment Fraud... And What to Do if it's Happened to You to learn more about whether you may have been the victim of investment fraud. We invite you to contact us directly at 614-224-6000 or toll-free at 1-866-827-6537 for a free consultation.