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Margin Debt Down - ETrade's Doing?

By Mark H. Astarita, Esq.

Margin debt in retail investors' accounts has declined 37% from 2007 through the end of November, 2008.The WSJ is attributing it to an intentional move by investors, to reduce margin obligations in light of the recession.I am not so sure. A significant part of that decline must have been caused by the overly aggressive margin liquidations by ETrade, Ameritrade and some of the other online brokers, which wiped out a significant amount of investor assets.Still, debit balances in margin accounts for customers of NYSE-member securities firms fell to $201.48 billion in November, the most recent data available, from $322.78 billion at the end of 2007.How much does the Madoff Mess add to that decline?

Full post as published by SECLaw.com on January 03, 2009 (boomark / email).