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Exec Loses ProxyMed Shares in Margin Call

May 02, 2000|Bloomberg News

Margin calls aren't just hitting small investors.

ProxyMed Inc. (PILL) Chairman Harold Blue reported Monday that most of his company stake, pledged as loan collateral, was sold by his brokerage after the shares plummeted. The executive filed a Form 4 with the Securities and Exchange Commission saying 618,582 of his shares were recently sold pursuant to margin calls.

A brokerage that lends money to a client for share purchases requires the borrower to pledge stock as collateral. When the value of this collateral falls below a certain level, the brokerage issues a margin call, requiring the borrower to either pay down the loan immediately or have the collateral sold.

Blue, who founded Ft. Lauderdale, Fla.-based ProxyMed, said he had borrowed money to purchase about $1 million worth of company stock at prices ranging from $9 to $14 a share.

Shares of the online health-care company have since plunged, and closed down 38 cents to $1.25 Monday on Nasdaq.

"With the precipitous decline in our share price I had a margin call and my brokerage firm sold my shares," Blue said. According to the SEC filing, Blue's shares were sold between April 17 and Thursday at $1.61 to $3.50 each.

Regulators note that margin lending has risen to record levels this year despite curbs on the practice at many online brokerages.

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