RealTime IT News

Web Brokers Put Investors on Tighter Leash

Concerned that online investors may be overextending themselves to purchase volatile Internet stocks, many online brokerages are imposing new restrictions on using borrowed money to pay for them.

Broker Salomon Smith Barney Wednesday put new restrictions on using margin accounts to purchase shares in 18 companies, including Yahoo! Inc., America Online Inc. and eBay.

DLJdirect is also limiting its customer's borrowing. The company said its clients can only borrow 50 percent of their portfolio's value and 90 percent of the value of bonds they hold.

Industry experts say the moves reflect brokers' concerns that individuals are overextending themselves financially to purchase Internet stocks and other high-flyers.

They say until the prices of Internet stocks stabilize, this is the only way online brokers can protect themselves. Experts say it's good for online investors because it helps guard against moves they might regret later.