Personal Finance

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i have been through many online brokers and i liked interactive brokers because they had lower margin costs. well, that’s being penny wise and pound foolish.

first, i had a problem where they liquidated parts of my account because i crossed a threshold. i realized that this was my mistake for overbuying, but i felt i should have been given more warning than 10 minutes. either way, i chalked this up as my mistake and made sure that my account had a signfication SMA cushion. that was six months ago.

this monday (yesterday), when i logged into my account i noticed that there was a bulletin telling me that stocks with market capitalizations of less than $100 million would be subject to increased margin requirements - 4x more than the prior day - and that would take effect within hours. as a result, i was forced to liquidate large amounts of my portfolio within hours. i called interactive brokers to request more time because my positions were sometimes more than 50% of an average day’s trading volume but i had significant equity in my account to cover losses and they were not in any danger of losing money on my account. they refused to grant me more than a few hours of extra time, thereby forcing me to move the market on my sales. if i hadn’t logged in that day, i would not have been aware of this important change. they did not even send an email!!

when i first noticed the bulletin, i asked for a hypothetical account update to see how much i would have to sell, and they refused to give it to me. instead, customer service was unhelpful and said figure it out.

liquidating my positions cost me on average 10% of the market value of my stocks (because of the condensed liquidation time) and more of my equity because of the leverage. by the end of the day, my stocks were much higher than where i sold which indicates to me that i was the one holding down the price.

this short time frame from interactive brokers was irresponsible on their part and demonstrates a lack of respect for their customers.

i had previously forgiven their sales staff for being less intelligent that the average moron, but these past couple of days really proved why that was a mistake. in a time of stress, (with one exception) they didn’t have any idea what was reasonable and what was unreasonable.

i tried to wire money in, but they said it will not clear quick enough (although they could see that i had sent).

all in all, i will never use them again. EVER.