The U.S. Court of Appeals for the Third Circuit held last week that a brokerage firm’s sale of an account holder’s securities for failure to meet margins calls was proper, notwithstanding the account holder’s claims that his contract with the firm was a forgery.

In 1996, Andrew Walzer signed an options agreement with Muriel Siebert & Co. (MSC) that, among other things, authorized MSC to increase Walzer’s margin requirements. After Walzer failed to satisfy margin calls, MSC sold $802,000 worth of his securities. Proceeding pro se, Walzer alleged that the 1996 options agreement was a forgery, and (though less than clear) that MSC violated Section 10(b) of the Securities Exchange Act when it sold Walzer’s collateral claiming it had a right to do so under the 1996 options agreement. The Third Circuit held that Walzer could not establish a Section 10(b) claim because he himself did not sell the securities and because he could not establish reliance on the purported misrepresentation.

Walzer v. Muriel Siebert & Co., No. 10-4526, 2011 WL 4625704 (3d Cir. Oct. 6, 2011).