Securities Trader Representative (Series 57) Practice Exam

A "margin call" signifies a broker's demand for additional funds or securities from an investor whose margin account has fallen below the required maintenance level. This situation typically arises when the value of the securities an investor purchased on margin decreases, resulting in insufficient equity in the account to meet the broker's requirements. The broker seeks to protect their interests by ensuring that the investor has enough collateral to cover the position. Failure to meet the margin call may lead to the broker liquidating some or all of the investor's securities to restore the account to the proper margin levels.