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Is Zecco A Scam or Legitimate?

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(Updated Sept. 17, 2009) Zecco recently updated their free trades program to have a requirement of a $25,000 balance!

Anytime I hear free I immediately think “scam.” Let’s be honest, the person offering up something for free is looking for some sort of benefit and unless I can find out what the benefit is (especially if I’m giving them all the information they need to steal my identity), I’m going to assume the benefit for them is to steal my identity.

So, is Zecco legitimate or a scam? I let time do the testing because most people are savvy enough to sniff out a scam relatively soon, especially if you let mainstream media do the vetting. Right now, they appear legitimate and that’s because they’re actually a division of Equinox Securities, Inc. According to the NASD Broker Check, Equinox Securities (CRD# 135398, SEC# 8-66916) registered as a corporation in California on 01/21/2005 and is located in Ontario, CA. It’s currently not suspended by any regulator and has not yet had any Arbitration Awards, Disciplinary and/or Regulatory Events. I downloaded the full Equinox Securities report and you can see Zecco Trading listed on page 4.

So, the NASD knows about them but that doesn’t necessarily mean that they’re 100% legit, brokers with fraudulent intentions can register – they just can’t have committed fraud yet. That’s where the second line in their little fine print comes into play, they are a member of SIPC (Securities Investor Protection Corporation), an organization created by Congress in 1970. What do they do?

When a brokerage firm is closed due to bankruptcy or other financial difficulties and customer assets are missing, SIPC steps in as quickly as possible and, within certain limits, works to return customers’ cash, stock and other securities. Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever or wait for years while their assets are tied up in court.

Now, just because they say they’re in the SIPC doesn’t make it so, but I was able to confirm it through SIPC’s member check. Equinox Securities Inc. located at 2084 E Francis Street, Ontario CA 91761, an address that matches the NASD information. It’s a Cold Fusion script so I couldn’t link directly to the results but they’re in there.

Again, is participation in this program a guarantee it’s not fraudulent? Of course not, but that’s a lot of hoops to jump through if you’re a scam. So, after a brief bit of research, Zecco passed the extensive sniff test for me but to be honest, all the talk of their abysmal customer service makes me think you get what you paid for. Trades are cheap, why not go with a firm that has some credibility in the marketplace? I, for one, am going with TradeKing, twice named Smart Money’s #1 Discount Brokerage of the Year 2006 & 2007 (they removed the discount category after 2007), where trades are only $4.95. Smart Money put Zecco dead last in customer service.

I think customer service in a brokerage is crucial. If I have a problem, I don’t want to wait on hold.

{ 205 comments, please add your thoughts now! }

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205 Responses to “Is Zecco A Scam or Legitimate?”

  1. Rabidog says:

    I have 3 accounts at Zecco and have never had any negative issues with them. I’ve been with them for 3 years and I’m completely satisfied

  2. Randy says:

    For all those who are curious, it’s an industry standard to charge an outgoing account transfer fee…..

    now that’s now to say certain brokers waive those charges, but it is in no way “bad” or evil if they do…it’s industry standard….

  3. JJ2000 says:

    Zecco Scam

    Zecco has a strange policy regarding daytrading. They constantly issue a margin call called “daytrading call”, which require you to send in a new money to your Zecco account. I traded with Scottrade for several years, and I never got such a margin call from them. Scottrade often issue margin call that can be met by selling your positions. I am with Zecco for less than two months, and I have already received three “day trading calls” from Zecco, and this type of margin call can only be met by sending in new money. I never got regular margin call (the ones can be met by selling positions) from Zecco. I think Zecco designed this “day trading call” trick to force customers to send in new money constantly, and that how Zecco can kept exbanding its business! I really hate this dishonest trick!

    • Jim(not the author) says:

      If you are day trading, that means you have at least 25,000 to do it. It’s a federal regulation for you to do so and has nothing to do with brokerages. You honestly sounds like you have no idea what you’re doing. Of course day trading call is different from a standard margin call. At least learn about stocks before you start to trade. Also if selling your positions do not cover it, it means that you never had 25,000 to day trade to begin with, which has nothing to do with zecco and everything to do with Federal regulations. Don’t invest if you have no clue what you’re doing.

      Anyway, Zecco is fine and they are definitely not a scam. They simply do very little advertising and charge extra on things that most investors wouldn’t be doing anyway(option calls etc.). I just had to post because it’s just ridiculous to complain about a free service.

      Clearly this author has done very little research on Zecco if he has no clue on how they allow you to trade for free. It’s always good to write about something that you have very little understanding of. I was also very skeptical about Zecco but I actually did like 15 minutes worth of research about it and understood its business model.

      • Bill of Atl says:

        Your facts about day trading are not exactly correct. You can day trade up to 3 times in a rolling week with less than $25k. If you post a 4th position within a 5 day period then your account will be frozen for thirty days or until you get your account value up to the $25k acount minimum. At the $25k amount level the SEC will allow you to take unlimited positions during the day. I know of many that will post up to and over a thousands trades per day…a bit psychotic for my taste but to each his own.

    • g sanon says:

      You should read all the rules.

  4. Randy says:

    but they’re not forcing you to deposit money. If you don’t deposit money. They do not do anything to your account negatively anyway….

    • JJ2000 says:

      No, this is not true. If you don’t send in the new money before the due date, your account will be frozen and you can only sell existing positions and are restricted from buying any new position for three months.

  5. Randy says:

    True, but not like that will hurt you negatively. Not letting you make profit or buy stuff is just simply not a “positive” thing, but it is not “negative” like they take your money and throw it away…you still have everything. You’re more than welcome to take out your cash

  6. JJ2000 says:

    Yes, you can take your cash and leave Zecco, otherwise your money will sit in the account, because you are restricted from buying. If you do want to do trade (buy positions) with Zecco account, you then need to constantly send in new money. This is a stratigy Zecco used to expand their business. A tricky way of expanding its business!

  7. Simba says:

    I am having a very difficult time getting my funds posted to my account. I have already had two promises made regarding transfers and both have been broken. I am getting suspicious of this company with every passing minute. My thoughts here are to now pay the few dollars more per trade and buy piece of mind that my money will be there when I wake up in the morning. If I don’t see my funds made available today, as promised a second time by Zecco, I will return to this blog to post my actual experience with Zecco (email correspondence).

  8. Randy says:

    if you transfer large amount of funds in via ACH, then that’s your fault haha

  9. John says:

    I am new to zecco. Does Zecco gives margin call even if we have $25,000 when we do day trading?

  10. Randy says:

    extremely lack of information, but i would say no. Can you clarify what kind of margin calls you get now?

  11. Darren says:

    Im new to Stocks, and I want to start small and build my way up. I was doing some research and it looked like Zecco was a good online trading start. I just have two questions.

    How is the process? Dealing with the website on a day to day basis? And will my money be secure as far as my buying and selling is concerned?

    • Avichi says:

      Darren

      Your strategy is great one, the money you put on Stock at Zecco should not be more than “1000 lattes” you would other wise have drank.

      The process of dealing with website is straight forward tell the system what stock you want to buy at what type of order and how many and how much you are willing to pay (to buy) and how much you are willing to sell.

      My observation with the website is that sometime the order is rejected if there “Limit” or “Stop Limit” transanction on a buy/sell while the “market ” with GTC is open. I don’t know why, but the same order will go thru when the market is closed, other wise the execution on “market order are instantaneous”,check the quote before you execute.

      As far as the “money” be secure well the actual Zecco accounts are help by a company in Texas called “Penson Financial” and they handle all the back-end transactions and account maintainanace.

      I do not know where they keep the all the zecco account holder deposits.(Bank Name). I am sure you can find out more about the Penson FInancial from the SEC and FINRA.

      Hope that helps. Good luck investing, do not invest based on emotions.

  12. jim says:

    bbb.org gives them an a-
    theyre perfectly fine…

  13. vish says:

    JJ2000,
    There is this T+3 rule, it takes 3 days for trade to settle, even if you sell your stocks, money will not be in your account until 3 business days and if you buy (if they let you buy) before 3 business days, it could result in “good faith violation” or “free riding” I think you can only make 3 violation in a one year period after 3rd violation they will restrict your account, that is you can only buy with your settled funds. Selling – no problem, you can sell it next second after you buy.

  14. Alex says:

    They don’t seem to be a scam, but you definitely get what you pay for. Here are a few things I’ve noticed so far: 1) Account setup takes a long time, for example 9 days for an ACH which only takes 2-3 days at most other brokers, 2) Their customer service folks are polite and quick to respond, but they seem very young and inexperienced, at least the ones I talked to, 3) The website is VERY bare-bones, absolute minimum functionality to enter orders and view positions, for instance it won’t track cost basis or allow tax lot selection, 4) Their actual trading platform is flaky, for instance ‘Foreign Ordinaries’ like VLCCF are not available for trading at all and some orders for regular NYSE/NASDAQ stocks get a mysterious ‘ECN Rejected’ error. I definitely recommend Zecco for experienced long-term investors. Stay away if you’re inexperienced – their reps will not be able to address your problem when you are confused yourself; you need to know exactly what you want when you call them. And stay away if you’re a short-term trader, as the trading platform flakiness will kill you (to avoid this, I enter all my orders before the market opens).

  15. Andrew says:

    I have problems with withdrawing my funds from Zecco. I see on the Internet that I am not the only one.

  16. pdwinter says:

    I too am looking for a new broker. Yes, there indeed are questions about Zecco but I have also seen, this very day, complaints about poor customer service, lack of reply, and rudeness from TradeKing. Low fees, by their very nature, are likely to suggest limitations of one kind or another.

  17. Jim says:

    I just started with Zecco In a very small way but Im already unhappy with their service.
    Lots of Email but no action. Ill see what happens in the next couple of days

  18. Daryl says:

    I signed up for zecco for the free trades and a few days later they announced an end to their free trading program.

  19. Garry J says:

    I have zecco for 4 months now and it was great when I first signed up. They’ve changed so many rules and add on fees that I question if they are even legal. My first few transfer of 5000$ went through within few days. Then I made a transfer of $20k+ and took them more than a week to put it in my account although my bank account was clear of that transfer. The first time I bought stock from zecco, I had under 100$ left so I bought some shares of penny, OTC stocks and now they changed the rule. I can’t even sell them. Selling $100 worth of penny stock, I have to shell out $700 transaction fee. Anything this company does is “BAIT AND SWITCH”. Most people that refer friends with their referral program don’t even get the $75 promised.

  20. John says:

    I’ve been using zecco for 3 years now. This is the first year I’ve seem to have problems with them. They are constantly putting me on margin calls, which I would then have to call in to clear up their mishaps. Apparently they do this manually and isn’t automated. They’ve attempted to charge me all these new hidden fees. This will be the last time I use zecco. I’ve moved all my funding to scottrade, which I opened along side of opening zecco years back.

  21. Debbie says:

    Earlier in the thread another poster talked about the trade settlement at Zecco. I joined in August of this year and so far when I’ve bought a trade and sold it three days later or more my payment was in my account the next business day. I believe if you sell before the third day you wait for three days for money in your account.

    So far Zecco has treated me right. I tried to join TradeKing earlier this year and even though I submitted the proper credentials online to prove who I say I am they said that wasn’t good enough and wanted more. Needless to say I dropped them and never funded the account.

    Don’t trade with Sharebuilder, whose trades are only $4.00 on automatic investing plan, but to sell is $9.95. Real-time trades are $9.95 to buy and $9.95 to sell. They offer none of the investing features on their automatic investing plan Zecco does, and on real-time I think all they offer is limit.

  22. Crookedneck says:

    I opened both a Zecco and a Scottrade account around the same time over 2 years ago. During this time I had one incident after another with Zecco where they messed up. They would give me free trades and reduced fees from what they were charging their regular subscribers to keep my mouth shut. Yes it seemed like a bribe to me, but it gave me cheap trades so I stopped tweeting about how much they raised fees on stocks trading less than $1.

    Now I was recently informed that when I went to sell a security I had in my acct. that I would be subject to fees up to $700 because it was DTC ineligible and that it was Penson who was charging this and they were now passing this along to all their customers. I asked why were we not given any warning or advance notice and why was I not told this when I purchase this security. They would only state that it wasn’t them, but Penson and that there was nothing they could do.

    Now tell me is this the kind of broker you want? A broker who makes deals to keep people quiet when they have been wronged by them. A broker who changes it’s policies in the blink of an eye without warning you and blaming it on it’s clearing house and that I should trade stocks over $1 on the big boards. What’s next Zecco? Let’s face it they are one of the worst brokers out there with a terrible customer service department.

    Needless to say I am in the process of transferring my securities over to Scottrade, whom I never had a problem with.

    BTW – When I told Zecco that I would be posting about this whole experience on the internet, they offered to pay my ACAT transfer fees, thinking that this would keep me quiet, while I am stuck with some of these new non DTC eligible stocks that would cost me up to $700 to sell and some of them had a restriction of how much I could sell at a time. I told them I would accept the free ACAT transfer offer, but that I would not keep quiet about all these past and present ordeals where they gave me deals to from posting how they operate.

    Zecco is a real joke! I would suggest that if you have an account with them that you transfer to better broker before you get burnt. If you are thinking of opening a new account them, it would behoove you to investigate what I am saying before you find out the hard way that you made a giant mistake.

    Now Zecco is offering a $500 contest thinking this will make up for everything and that they will lure in new business – Give me a break!

    Just go and check out what they did on Aprils fool day 2009! Then you will know why I really say that Zecco is a joke!

    Cheers and be careful out there!

    • tired of scammers says:

      wow who should i go with i need to get out of zecco.. i c you like scottrade but is that who i should use not lots of money to use but i am expirament with small funds and try to play very small penny stocks to double and then study the results you could say … but wow not with april fools by zecco . ty for you input and blog

  23. andi sulistio says:

    1. everyday data always in error , i have to call them every day to fix the data
    2. becareful for the interest margin , last month they charge me $350 for $50 interest , after i call to them they promised to fix it and the next day i call the other customer service said that the data was correct , and i request investigate until the next day they said there is an error on the system and they return the interest credit $300 to my account
    3.watch your balance everyday very closely it could change much less for no reason
    4. the worse thing when you put the extended hours trading order for limit order and then the stock touch your target limit price order and didnt excecute and still goes bellow the price becareful do not try to cancell or submit your cancellation order because when the reguilar market trading hours open , it will execute all your cancell otrder , and they will accuse you with free ride and they even threten you to shut up and nopt to tell anybody

    5. anyone objection about this matter , more than welcome to contact me and i will send you all the proof that their system is not working really well , now i have to watch out until i can take all my money out of the account and never come back

  24. Bruce says:

    Horrible experience. Aside from the incompetence this firm is malicious.

    They have intentionally sabotaged one of my attempts to transfer my account, and are attempting to do so again. First time they provided the transferee broker with a statement that I had naked positions which was completely fabricated. Now they are refusing to transfer a single holding to the new broker for a week. SEC has been notified.

    Other than this intentional malfeasance, Zecco is incompetent. Their orders execute slowly and poorly. The have broken up my orders before and charged double commissions. For the duration of my trading with them, they would cut me off from modifying my orders after 2-4 attempts on SOME stocks, at which point I was not able to even cancel them. My account was shifted into “margin” status without my consent. And of course they executed cancelled orders, only to sell those equities automatically after the equities have taken a loss, and not compensating me for such loss.


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