Part of our operational certifications was a quarterly analysis of all stock secured loans to insure the margin was still as the loan docs called for. If it fell short we called for additional collateral or a principal reduction of the loan to maintain the margin. Regulators would always classify any stock secured loan that did not have a collateral margin per terms. Until the margin was cured we had to place the loan on the "Watch" list.
This audit was preformed everytime there was a drop in the market. If it was everyday for a week so be it.
If the borrower couldn't provide additional and "acceptable" stock or make a principal reduction we sold the stock.
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