They cannot require you to make up any loss. The trustee is the owner of the account and you are just the beneficiary. They do not and cannot legally require that you guarantee the account personally. They would just have to take the loss themselves. Presumably they believe that their margin requirements and monitoring are good enough to stop any loss from getting out of hand.
There is no way that is correct. You can make all sorts of exotic investments in an self-directed IRAs using trustees that allow such things - you are saying if you make an investment that is disallowed that you can go after the trustee because they shouldn't have let you do it?!? If you look at the language of the trustee agreements they explicitly say they have no control over your investment decisions. Also they could not be aware of your conflict of interests that could disallow specific investments - how could they be liable? From the IB IRA customer agreement "I understand Principal Trust Company is not an investment advisor and does not supervise or control my investment representative." https://www.interactivebrokers.com/...le=registration_1/ira_customer_agreement.html If you read the thread that jackpearson linked to in his last post you will see that there is discussion that active trading in IRA could be disallowed while less-active trading is fine... expecting IB to be able to monitor/control whether you crossed some invisible threshold that could run afoul of the IRS is not reasonable. That isn't what IB says - again from the IB IRA Customer Agreement: So you don't think ES could gap 50 points intraday?
"You can make all sorts of exotic investments in an self-directed IRAs using trustees that allow such things - you are saying if you make an investment that is disallowed that you can go after the trustee because they shouldn't have let you do it?!? If you look at the language of the trustee agreements they explicitly say they have no control over your investment decisions. Also they could not be aware of your conflict of interests that could disallow specific investments - how could they be liable?" There is no such disclaimer that I know of in the IB agreement so that is a different situation. "From the IB IRA customer agreement "I understand Principal Trust Company is not an investment advisor and does not supervise or control my investment representative."" They are not holding themselves out as an investment advisor but surely they are holding themselves out as experts in designing IRA trusts relating to taxation and legal issues. "If you read the thread that jackpearson linked to in his last post you will see that there is discussion that active trading in IRA could be disallowed ...." A purely hypothetical and highly doubtful theory, as pointed out in that thread. No one has ever come up with an example of that happening and there is no IRS warning about that in connection with conventional broker IRA's. "CUSTOMER SHALL BE LIABLE AND WILL PROMPTLY PAY IB FOR ANY DEFICIENCIES IN CUSTOMER'S ACCOUNT THAT ARISE FROM SUCH LIQUIDATION OR REMAIN AFTER SUCH LIQUIDATION." OK thanks for finding that in the agreement. I think it might be improper for IRA's but I see it is there so if it is enforceable then they could sue you for the balance. ... "So you don't think ES could gap 50 points intraday?" Yes it could. I was talking about what IB must be thinking in terms of their ability to control losses, not what I think.