Broker-dealers do not participate directly in equity markets in large quantities; instead, they participate indirectly by lending to hedge funds via their prime brokerage divisions. We show that shocks to broker-dealer financial health affect their credit supply; however, hedge funds are typically able to diversify away these shocks. This is consistent with a high ability to substitute borrowing to non-distressed broker-dealers. This ability is not unlimited: when the shock to broker-dealer health is sufficiently broad and spills over to non-affected broker-dealers, it triggers hedge fund equity sell-offs. We show that such a broad broker-dealer shock occurred in the first quarter of 2016 when several European broker-dealers became distressed. These sales affected equity prices, generating abnormally low returns for the four months immediately proceeding the shock. Moreover, we estimate a price multiplier of (at least) three, meaning that if hedge funds, in net, sold off 1\% of the total shares outstanding, the stock price fell by (at least) 3\%. Overall, our results indicate that broker-dealer health matters for equity prices under conditions of broad distress.