# CFD provider and margin call



## kjkjkj (5 November 2009)

Hi all,

Recently, I close all my positions and I put my CFD account on hold and I took all my money out from this particular CFD provider as I needed elsewhere.  Three weeks later they contact me and told me that I owe them money due to rights issue being excercise when I shorted the stocks before I close my account.  On the day of the share being release to the market, they fill me in at 4 cents higher than the high as well.  This is probably a mistake by the dealer as mistake that favours them is all too common from this bucket shop provider.  I am not happy about this as I use this money up already and don't have this money any more and can't cover this.  If they know that there is a right issue, they shouldn't have let me withdraw all my money.  They have threathen me with possible legal actions such as court appearance if I don't pay up.

Have anyone been in this position and don't pay up?  Or have money owing to CFD provider thru margin call or something else.  I am just wondering, what if you don't pay up?  Or what are your options?


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## skyQuake (5 November 2009)

kjkjkj said:


> Hi all,
> 
> Recently, I close all my positions and I put my CFD account on hold and I took all my money out from this particular CFD provider as I needed elsewhere.  Three weeks later they contact me and told me that I owe them money due to rights issue being excercise when I shorted the stocks before I close my account.  On the day of the share being release to the market, they fill me in at 4 cents higher than the high as well.  This is probably a mistake by the dealer as mistake that favours them is all too common from this bucket shop provider.  I am not happy about this as I use this money up already and don't have this money any more and can't cover this.  If they know that there is a right issue, they shouldn't have let me withdraw all my money.  They have threathen me with possible legal actions such as court appearance if I don't pay up.
> 
> Have anyone been in this position and don't pay up?  Or have money owing to CFD provider thru margin call or something else.  I am just wondering, what if you don't pay up?  Or what are your options?




Owing money because ppl are exercising a rights issue? Sounds like BS to me. 
When you were short, and the particular share announced the rights issue, did you make money from that? Or did they make an adjustment? (to the tune of the value of the rights issue)


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## skc (5 November 2009)

kjkjkj said:


> Hi all,
> 
> Recently, I close all my positions and I put my CFD account on hold and I took all my money out from this particular CFD provider as I needed elsewhere.  Three weeks later they contact me and told me that I owe them money due to rights issue being excercise when I shorted the stocks before I close my account.  On the day of the share being release to the market, they fill me in at 4 cents higher than the high as well.  This is probably a mistake by the dealer as mistake that favours them is all too common from this bucket shop provider.  I am not happy about this as I use this money up already and don't have this money any more and can't cover this.  If they know that there is a right issue, they shouldn't have let me withdraw all my money.  They have threathen me with possible legal actions such as court appearance if I don't pay up.
> 
> Have anyone been in this position and don't pay up?  Or have money owing to CFD provider thru margin call or something else.  I am just wondering, what if you don't pay up?  Or what are your options?




I don't think you have any way to argue that they shouldn't let you withdraw the money. It is probably your responsibility to know what your liabilities are.

Is this DMA or market maker? What's the stated policy on corporate actions? 
How much are they asking for and how did they calculate that? Is it the (last price before ex-rights) minus the TERP? What about the SP now? If the SP is closer to the rights exercise price, then shouldn't you argue that you can buy the stock on current market to satisfy the rights exercise?

I would fight the dubious trade first of course.


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