five-hundred-dollar rule

five-hundred-dollar rule

The SEC provision that prohibits brokers from instituting punitive measures against an investor's margin-deficit account if the amount of the deficiency is under $500. The five-hundred-dollar rule is intended to preclude brokers from having to sell part of a client's investment position because of a relatively small cash deficiency in the client's account.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.