As someone who worked the aftermath of a margin loan cleanup,...

As someone who worked the aftermath of a margin loan cleanup, let me tell you that the margin loan used to buy NKP would have rated NKP as an LVR of 0%. Meaning they cannot use the NKP assets to extend their loan. They would have used safer, long-proven stocks, cash, resources or property. Therefore the decrease in NKP would have had little to do with a margin call.

Now, when a margin is called, it is often after repeated warnings. Atleast in Australia, there is regulation to ensure that a account owner (not just the broker) is atleast notified and given time to action. Normally a margin buffer is set up to allow for time to communicate.

Now, when a margin is called a banker may cover their arse by selling like crazy. It is no risk to them as the Margin loan is set to cover the value of the loan, but if they wait to find a way to extract more value they may introduce risk if the assets value continue to fall. They will normally do this for individuals and if the customer is lucky to have some LVR 0% stocks like NKP, it will be the first stock to be sold. As it will not impact the amount that is able to be loaned.

However, the big margin loans for major corporations would normally be done in a more polite way. Dumping on the market is almost unheard of in these situations. I have a feeling that there is more to this story. Dumping a major customers stock on market en masse is a good way to establish a terrible reputation in the market.