A
margin account in which the amount of
equity is below
SEC or
brokerage requirements. Such an account is not allowed to
buy any more
stocks until the level of equity is raised; a portion each
sale of
stock must be used to pay down the account's
debt.
Regulation T sets the minimum equity standards, but individual brokerages may set higher standards. In general, however, an account becomes restricted when the
market value of the stocks purchased
on margin falls below the amount owed on the stocks. A restricted account is sometimes referred to as a
blocked account.