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Employee Stock Options Cause Financial Jeopardy
Many employees who exercised options for stock of their once high-flying technology companies are in financial jeopardy.
Moreover, it appears that some brokerage firms recommended not only that employees exercise their employee stock options, but also that they hold their company stock and use it as collateral for margin loans to purchase more company stock or stock of other companies.
Use of margin is speculative. When much or most of the collateral for margin purchases is in one stock, serious questions as to suitability arise.
Those employees now have seen their portfolios wiped out, and face tax bills they cannot afford to pay.
Sources: The New York Times On the Web, April 18, 2001; Chicago Tribune, April 17, 2001
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