The credit balance in a margin account is known as a fictitious credit because it cannot be withdrawn by the customer since it is held as collateral to secure the broker's loan of funds and securities to the customer. A fictitious credit is comprised of the proceeds from short sales and the margin requirement, which is established by Regulation T of the Federal Reserve Board. A free credit balance, on the other hand, may be withdrawn at any time.
Most states have laws governing the conduct of fiduciaries.
Some states maintain a list of securities, known as the legal list, which are permissible investments for fiduciaries acting on behalf of their beneficiaries. Other states simply use the prudent man rule which requires that fiduciaries act as a prudent man or woman would with regard to how they invest on behalf of their beneficiary. In addition, the document appointing the fiduciary will establish parameters and guidelines for their activities with respect to the beneficiary's assets. Some examples of fiduciaries are executors of wills, administrators of estates, receivers in bankruptcy, trustees, and custodians for minors. For instance, under FIFO, or first in, first out accounting, an investor who purchased 100 shares of XYZ in January and another 100 shares of XYZ in March, and then sold 100 shares of XYZ in November, would have sold the first 100 shares bought in January.