NEW YORK, NY / ACCESSWIRE / November 2, 2022 / National investment fraud lawyers KlaymanToskes (“KT”) is investigating full-service brokerage firms on behalf of current and former Peloton (NASDAQ:PTON) employees and investors who sustained losses from holding concentrated or margined positions.
On December 24, 2020, Peloton’s share price reached an all-time high of $162.72. Today, Peloton is at $8.51, representing a 95% decline.
What Does This Mean for Investors with Large/Margined Positions?
Investors with unhedged, concentrated Peloton positions have suffered as they saw their account values decline. Similarly, investors that pledged their Peloton stock as collateral for margin loans may have been forced to sell some or all of their positions to meet margin calls.
Brokerage firms have a duty to implement risk management strategies to protect their clients’ assets. These strategies include diversification and hedging. Failure to “hedge” the value of a concentrated portfolio directly exposes an investor’s concentrated position to fluctuations in the markets, potentially causing millions in losses.
Co-Founder Experiences Margin Call
John Foley, co-founder of Peloton, experienced the effects of margin calls himself. Foley pledged approximately 3.5 million shares or 20% of his Peloton stock as collateral for a margin loan at Goldman Sachs. While Foley secured private funding by Goldman to prevent the sale of his shares, not everyone has this ability before it’s too late.
According to securities attorney Lawrence L. Klayman, Esq., “Had John Foley’s Peloton position been hedged, he would have had a position to offset the decline that Peloton experienced and would not have needed to secure any additional funding. Goldman Sachs’ failure to manage the risks associated with Foley’s Peloton concentration and margin use is considered negligence, and is a basis for liability in a FINRA arbitration claim.”
KlaymanToskes encourages investors with concentrated and/or margined positions to contact securities attorney Lawrence L. Klayman, Esq. at 1-888-997-9956 or email@example.com. Investors may also download our Special Investor Report.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered more than $250 million for investors in FINRA arbitrations alone. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.