What is an Undermargined Account?
Undermargined accounts are investor accounts that have dropped below the minimum standard of maintenance requirements set by the brokerage house. When a customer account falls to a level that is below the minimum maintenance requirements, is it not unusual for the broker to issue a margin call to the client. The amount of the margin call will be at least enough to bring the undermargined account back up to those standards, and often is a small percentage above that minimum requirement. When thinking in terms of a margin call that is utilized to bring an undermargined account back up to standards, it may be helpful to think of the call as a debt that is now due. By recognizing the call and paying the amount of the call to the broker, the investor account is credited with the amount and the undermargined account is brought back into line with the requirements outlined in the agreement between the broker and the investor. Depending on the particulars of the working relationship between th
