An account happens when you deposit money (legally) into a registered investment account at a known financial institution. An account comes in many flavors, the most sweetly vanilla of which are your basic and checking and savings accounts at a bank like Wells Fargo, Bank of America, Bank of Uzbekistan. A spicier flavor of an account type is a margin account, usually held in the form of stocks deposited into a stock broker's margin account.

Why is margin good? (And it has nothing to do with butter.) It's good because you can borrow in most systems up to 50% of the value of the securities you have in that account. Since the various terrorist acts of modern times, the level of inspection, disclosure, and legal strictures has increased dramatically, so if you have an actual registered-for-realz account, expect that you are sending loving letters to the NSA every time you trade.

Related or Semi-related Video

Finance: What are Eastern and Western Ac...15 Views

00:00

finance a la shmoop what are a stern and Western accounts what are they well

00:08

there are two different team methods in which underwriters or stockbrokers or

00:13

investment bankers sell securities to their constituencies and that's $5 word [under writers, brokers and bankers on a stage]

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for mutual funds hedge funds and just generally wealthy people their

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constituencies of stock brokers quote team unquote is only a notional thing on

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Wall Street and the line between the two types of teams gets drawn clearly in a

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Western V Eastern style of selling think the Mississippi River a Western account [world map with western account/eastern account division]

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is a divided account what does that mean well like the Old West

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this style agreement is more or less every man woman or other for him/her or [western account paper on desk]

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itself it includes armadillos they're people and since in most deals there are [hand signing document]

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multiple syndicate partners who is responsible to sell is what really

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matters so in any given deal when the partners sign up to bid for the business

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to take whatever dot-com public it is those partners in a western-style [partners receiving stock]

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account who are each on the hook to sell whatever amount of shares or dollar

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volumes that they individually have committed to sell in other words you

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break it you bought it or rather you bid for it you own it in a Western account

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the allegory is the cowboy who has his own set of twenty eight cows he feeds [western account cowboy]

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clothes manages and you know provides a social life for all on his own at the [cows in a field]

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other end of the country yeah over here lives the eastern style account [map of USA with Eastern accounts]

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arrangement not sure what it is about East Coasters

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maybe it's the history of unions there but they all seem to want to work [people on strike]

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together and then go figure well Eastern account syndicates oblige

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members to sell not only their own allotment of shares but also the amount

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that is not sold by other syndicate members that is each individual member

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is not only on the hook to sell the shares that they have committed to sell

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but they're also responsible for selling the shares of the other players in their

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syndicate think like there's now 300 cows and each Cowboys got his 28 or so

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but he's got to worry about all 300 you can imagine that for a company nervous

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about getting all of their shares placed properly well they would lean hard on

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the investment bank to adopt an Eastern style team sales approach instead of a

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Western one regardless of eastern or western style deals the most important

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element in offering getting properly placed as of course that the bankers get

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paid as long as the contract is set up so that the banker only makes money if a

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successful deal happens well usually everyone selling securities is kept fat [guy throws money into the air]

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and happy and the same may not necessarily be said for the people who

02:54

bought them

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