ShareBuilder Agreements

Margin Disclosure Statement

Capital One Investing, LLC (“ShareBuilder”) 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 your Margin Account Agreement.

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 ShareBuilder, you will open a Margin Account. The securities purchases are ShareBuilder’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, ShareBuilder 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. These risks include the following:

  • 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 ShareBuilder to avoid the forced sale of those securities or other securities in your ShareBuilder Account.
  • ShareBuilder can force the sale of securities in your account. If the equity in your ShareBuilder Account falls below the maintenance margin requirements under the law, or ShareBuilder’s higher “house” requirements, ShareBuilder can sell the securities in your ShareBuilder Account to cover the margin deficiency. You also will be responsible for any short fall in the account after such a sale. If margin calls are repeatedly satisfied by the liquidation of securities, whether by ShareBuilder or you, ShareBuilder may place a 90-day restriction on the use of margin or, in some cases, remove margin from your ShareBuilder Account.
  • ShareBuilder 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. ShareBuilder may attempt to notify customers of margin calls, but is not required to do so. However, even if ShareBuilder has contacted a customer and provided a specific date by which the customer can meet a margin call, ShareBuilder 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 margin account is liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, ShareBuilder has the right to decide which security to sell in order to protect its interests.
  • ShareBuilder 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 ShareBuilder to liquidate or sell securities in your ShareBuilder 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.