Dear Liz: Is it common for a brokerage agreement to say the firm can close my account for any reason and without any notice? The agreement goes on to say that the brokerage can liquidate the investments in my account if it’s closed and that the brokerage is not responsible for any investment losses that result.
Answer: The short answer is yes — brokerage accounts can be closed at any time by the firm or by the client.
Such agreements often specify certain actions that can trigger a closure, such as failing to maintain a minimum required balance. But the agreements also typically have language that allows the brokerage to close your account at any time and for any reason.
Brokerages don’t commonly close customer accounts. If yours does, however, move quickly to transfer your investments to another firm.
Failure to act could result in your investments being liquidated, and you would owe capital gains taxes on any appreciation in their value.