NEW YORK — Two Florida limited partnerships have sued a brokerage for at least $100 million, accusing it of "panic, mismanagement and indifference" during last Monday's stock market crash.
The suit was filed in federal court Friday by Pompano-Windy City Partners Ltd. and East Wind Associates Ltd., which traded in securities and commodities.
The Boca Raton, Fla.-based partnerships accused Bear, Stearns & Co. of liquidating their margin positions without notice.
Buying stock on margin involves using money borrowed from a brokerage to cover up to 50% of the cost of the securities.
When the value of a stock falls, a brokerage issues a "margin call," or an instruction to the client to put up more collateral. If the call is not met, the brokerage can sell off the stock to cover the shortfall.