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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. jim says:

    Also true. :)

    However, I have to say that Zecco does try. He’s right in that Zecco did offer free trades in October because of technical issues during some chaos in September. No company is perfect, but at least you know they are trying.

  2. I am Craig Prickett, VP of Marketing at Zecco. I first wanted to let everyone know that Bill R, who posted in this thread, is not a Zecco representative. We actively encourage all kinds of thoughtful and fair debate and love it when our customers tell us how they feel (and they aren’t shy). When it comes to specific service issues, we ask that customers work out their individual service resolution by communicating directly with the Zecco Trading Service Center through email (customerservice [at] zeccotrading [dot] com) or preferably through a phone call (877-700-STOCK or 877-700-7862).

    Zecco Trading is a fairly new company (just over two years old), and we are experiencing phenomenal growth – in the last 6 weeks alone, we have seen as many as 1,000 account openings a day. Our customers are showing their support too – over 30% of new customers in the last month came from friends’ referrals.

    We are constantly improving on all fronts (see http://www.zecco.com/blogs/zeccoscoop/You-spoke-We-listened-Were-delivering.aspx). In the November 2008 edition of Kiplinger’s, Zecco Trading actually scored higher in the Online Broker service category than some other more well-known brokers. When evaluating online brokers, I would encourage anyone to treat the process like making any important decision- gather information from a variety of sources and balance your costs with the features that you value and will use – and particularly for online brokerage, try to avoid paying for stuff you could get free elsewhere.

    Zecco.com is a financial portal of Zecco Holdings, Inc., which also provides access to Zecco Trading, Inc.’s trading service. Zecco Holdings, inc. is not a securities broker/dealer. All securities and investments are offered to self-directed investors by Zecco Trading, Inc. Member FINRA (http://www.zecco.com/utility/linkproxy.aspx?r=www.finra.org)/SIPC (http://www.zecco.com/utility/linkproxy.aspx?r=www.sipc.org). More information is located on the disclosures page (http://www.zecco.com/trading/tradingpolicies.aspx).

    Craig Prickett
    VP Marketing
    Zecco Holdings Inc.
    Burlingame, CA

    • CJ says:

      Of course you’re going to paint a rosey picture. That’s what your paid to do. Why don’t you tell everyone the truth about Zecco. Server Crashes, tied up phone lines, then you don’t help me with “my” problem? WTF

  3. Nicholos says:

    The Zecco customer service is terrible!
    They are slow in response and sometimes even hang-up on your calls.

    I have been having incorrect trade confirmation problem with Zecoo.
    After many attempts and finally get to speak to one customer service,
    they just quickly tell you that there is no problem on their system.
    And if you keep asking the same issue, they’ll close out your account.
    That is a threat!

    I am filling complains against Zecco.
    So watch out on your money and shares. Make sure you have daily logs
    with them. But even so, they still refuse to give any proof on the
    discrepency. Just Be careful! I will NOT recommend Zecco to anybody.

  4. stocker says:

    I have a Janney Montgomery Scott account for over 30 years. lately, there seems to be nothing but problems. I had buy orders, not taken, when, I asked my broker; he said,”he was holding off until my first buy order went”. I had partial orders cancelled, without my authority. I had payments on a margin order, I DO NOT HAVE A MARGIN ACCOUNT. The problems are mounting up every day— these people just do not care about customer service. Right now, I would, like to move my account, Where do I move it to ? I am not looking to save money, just looking, to do business with people with some brains. One time, not long ago, Janney Montgomery Scott, was a top notch brokerage firm. Right now, I am dealing with someone, at Janney. Everytime I ask her a question or have a problem, she offers to put the broker on the phone. What are the requirements for a series 7 and 63.

  5. nate says:

    give me a break! .. fine you keep paying money, i will keep trading for free.

    they make money on the (on average) large aggregate cash balance they hold.

    with TECHNOLOGY(im sure your all old, since your scared) , operating costs go all the way down to not much more than server costs. you guys probably want to phone in and pay $85 to be assisted by a broker.. whats so complicated??

    zecco cust service is good! it takes like 60 seconds or less to talk to a human.

    seriously, why are old people so scared. its insured anyway.. something you guys love, spending cash for peace of mind and probabilistically less wealth.

  6. bill m. says:

    I have zecco account now for a year. I think their platform is superior for the price you pay. I have a buy and hold and i buy stocks/etfs every few weeks under my 10 allowance. I had to call customer service once regarding a question i had and waited the most 60 seconds. If you need to speak to customer service, go and open a cd at your bank preferably near a branch where you can drive in. you should not need to speak to customer service if you follow all the instructions.

    there is nothing complicated about buy/sell, ticket symbol, quantity, limit order, market order.

  7. martin says:

    It is difficult to read your comments on Zecco. I have been with them for over 2 years and have saved lots of money. I went from paying 65$ or so per trade with a mannaged account with AGEDWARDS (10 years ago) to learning about online trading. As a trader you always want to reduce your cost basis. I used to trade with Suretrade at 1 dollar per trade and got spoiled by them. They were sold out to Ameritrade and as a frequent trader I was given 5$ trades. When I heard about Zecco I put some money with them. The site is slow to get onto and the customer service is not the best (it has improved), plus they went down to only 10 free trades per month, but this company will save you money. Also, don’t put all your eggs in one basket. I have accounts with Zecco, Ameritrade, and Scottrade and pay 0$, 5$, and 7$ per trade up to 10 per month in that order. If you have problems with 1 site you go to another. I execute most of my trades with Zecco as speedily as the other sites and I save from 50 to 70 bucks per month at Zecco…… Why are some of you buying costly mutual funds when there are so many ETFs out there that are cheaper, some with 2 or 3 times leverage and can be traded like stocks? As I read all of your postings, it dawned on me that I should start a newsletter and charge 1 dollar per month for the information. I bet I could make guys a few extra bucks and also educate you. Zecco is not as bad as you have described and I have been with them since the start. I save money and the executions are fast. If you don’t like the execution times, put in a limit order so you get the right price. Bottom line—— You can save money with Zecco, but also have an account with Scottrade and / or Ameritrade if you can pay 5 bucks per trade. Why would you want to overpay for a trade? Best of luck trading. The futures are up right now.

    • Tom says:

      How do you got 5$ with Ameritrade. I tried to negotiate many times without success. May be you mean Izone Ameritrade?

  8. BILL HOPEN says:

    interesting to read the history of Zecco’s rocky start…I started with them in oct 08, about 400 trades for free, wow that a $2000.00 gift to start with, I started with 15 k, then went up to 100k as the market started its insane churning…(I love it its like white water).

    There have been glitches and long waits for phone durring record volume days. The site siezed up, but only briefly and only a few times. I am up about 40k now two months later, because I was just free to trade alot, frequently and free and learn alot in the begining, and a trade is so cheap I step up or down into a position in many trades instead of all at once. It was easy to get margin, some days I approach 1/2 milllion dollars in day trades. i feel there is no limitation to how I can grow with Zecco nothing holding me back

    I find the platform calm and clear and easy to manuver, a calm light grey, no flashy colors, just the facts ma’m ….executions are quick everything is clear and simple to understand, which is important to me I’m pushin 60 and new to trading, I need shit simple like a jitterbug phone, so I can keep my mind on the market not the damn platform’s bells and whistles.

    I talked with Zecco and they are improving the platform to have a better up-to-the-minute read out on your balances and how you are doing. The positions are recorded immediately and accurately, but how much money you have made or have left to spend often has to be figured out on paper. You find out next morning what your total is for 100 trades the day before.

    I am addicted to the market, i love trading all day long, I need a 4.50/trade rate to be able to grab small incremental gains or to frequently reposition…10 option contracts can trade for under 10 bucks….thats a steal!, and if you trade 50 -100 a day it’ll really get expensive at twice the price and up elsewhere. Margin is 6% per year, so $200,000 can be rented for 33 buck a day……WOW, what a ride!…..you can make alot a dough with alot a dough.
    just becareful what your doing. keep options on every stock you have so you can manuver down with the market, buy sel buy sell buy sell. reposition quickly and often it only costs $4.50

  9. Jumbo says:

    I second that, the downside is, you will never know what your cash/equity/Day trading buying power is until next day. So you HAVE to keep everything on paper, but other than that , nice

  10. Li says:

    I am with zecco since 03/08 and like it. it improves customer services. It is easy trading and I enjoy it a lot. Of course, you do not put your all money in one basket. you need to diversify it. No one knows all things for sure until you die or do not do anything like a death body which is not win or not lose.

  11. ROB says:

    after reading all this after posting money to a zecco account i feel pretty bad. they LOST 2500.00 OUT OF MY ACCOUNT. WHAT A MISTAKE TO OPEN AN ACCOUNT WITH A 2ND RATE FIRM

  12. Jumbo says:

    please provide us with some examples so we investors can all learn from it ??

  13. CJ 1 Pilot says:

    Why is Zecco so cheap? Because if they charged the same as the Pros, then they would never be able to compete with them. They would go out of business. No server backups. If they go down, then forget trading because you will sit on the phone for at least an hour trying to call in a trade all the while your stock goes down the drain. Once you finally get to a CSR, they could careless about “your” problem.

  14. Anonymous says:

    I don’t think it was down anytime recently, are you talking about back in 2008?

  15. Jumbo says:

    go down? last time they go down was back in 2008? i’m confused

  16. Brandon says:

    I would stay away from Zecco. I thought they were great at first but I’ve had alot of weird issues with them. They keep sending me margin calls when my stocks are paid for in cash ect and I call up there customer service and they know nothing.

  17. Jordan says:

    Ridiculous company. Ridiculous interface. Ridiculous response to emails. Ridiculous handling of accounts. Now this ridiculous enterprise wants you to deposit … 25,000 for their lousy 10 free trades. Simply, ridiculous!

  18. Milton says:

    After March 1, there is NO INCENTIVE TO GO TO ZECCO. They are raising the minimum balance for the free trades from $2500 to $25,000. I am a customer there and that was the ONLY reason to go with them; now there’s none and I’m LEAVING. They are the absolute WORST all around – customer service, trading platform, — hell, there’s even glitches when it comes to calculating your DAILY BALANCES…which is hell for active traders! Even if you have $25,000 after March 1, STAY AWAY FROM ZECCO. Take it from someone who learned the hard way.

  19. datadave says:

    Thanks for all the info. you folks. I was on the verge of signing up w/ Zecco but due to (Govt.-mandated anti Terrorism measures) slow i.d. checks I would have to wait for them to process my account. Then they pulled that digit over to the right from 2500. to 25000 for “Free Trades”, and I haven’t yet sent my Id to them so I am checking around.

    To be fair, other on-line brokerages ask for similar minimums for lower if not ‘zero’ fees… but No One is Free. Zecco makes money on the interest held with your money in their accounts as some said elsewhere (wikipedia?). Interest on 25K is pretty substantial! Which easily offsets low fee trades. I am enjoying their “Zimulator” which is fun to play with seeing where imaginary money can grow. Their on-line persons describing details to newbies like me: ‘Zirens’ are pretty cute (but on the verge of ‘cheesecake’ and tacky). And I was willing to commit a few thousand for free trades but NOT 25K. So Zecco you’re probably losing my business (and that of others) by raising your minimum 10 Fold. Such a drastic increase Blows!

    Unless you know pretty clearly what’s going down it seems the only people making money on the stock market these days are the experts using OPM (other people’s money). Thank you, Umm, my zimulator shows that the only things moving upward are GLD and chinese stocks.

    (thk you, Alan Greenspan!)

  20. KJ says:

    I’ve never had any trouble with Zecco on anything. My ACH transfers process in the amount of time they say (3-4 days), my withdrawals go through fine, I’ve never been charged for anything.
    The one time I dealth with CS it was because I didn’t get the referral when I should have. I e-mailed a simple e-mail and in 2 days my bonus was there.
    It looks like a lot of the problems comes with higher volume traders and people who use the phone to do trades/contact CS (PS: WHO EVEN DOES THAT ANYMORE?)
    I’ve got a small balance, make 10 or so trades a month so maybe that’s why I can’t complain.
    But yes, after seeing the 10 free trades/month balance go up to 25K, I’m looking to switch.

  21. Linton says:

    I was baited in October 08 by free trades, only to be switched in Jan 09. I’m leaving. I put up with their poor tools and poorer customer service because I could get free trades, now they’ve flushed their entire $0 trade model down the toilet. I’m leaving fast as there is a mass exodus coming.

  22. JLW says:

    20 some years ago I adopted a philosophy that there is a “SCAM OR RIP-OFF TIED TO EVERYTHING”. It’s not often that you go around your daily life thinking thoughts to yourself such as “man…I didn’t pay enough for THAT service”, or “wow,…this thing hasn’t broken YET!”. I try not to apply this philosophy to things in life but it’s hard to go through a week where you COULDN’T of applied this motto. HAVING SAID THAT… as far as a brokerage goes, I like to choose one that has a “physical location”, like a brick and mortar building! If I have any issues like the ones I’ve read here, I can always drive down and put a “face” to a name….”in person”. People that work out of brick and steel buildings are easier to get in touch with if needed. Of course I do all my trades from my office in my home, but if I need to, I can drive to my local office faster than most people have spent waiting on the phone! Everyone has the right to make their own choices,…sometimes there not always the right ones, but you can change them. There’s a saying that goes….”if you do what you’ve always done,…you’ll get what you always got! How true! Profitable trading to everyone! After all,…that’s why we’re all here!

  23. Bo says:

    Zecco Trading has so far been my worst experience ever, though I haven’t dealt with many online brokers. I was lured by the concept unlimited of free trades in the past (the $30.00 yearly maintenance Fee wasn’t an issue) & decided to try it with a small account as a test, about $5,000. Shortly after the unlimited of free trades turned into 10 free trades a month which would still work for me, though it did cost me some commissions. With the latest change of $25,000 minimum requirement I decided this wasn’t for me so I transferred the account to an existing account in TDAmeritrade which just arrived today with a $81.00 debit (Zecco’s cost for transferring funds & closing the account). I don’t usually believe that you get what you pay for, but in this example it has been a very costly test with no upside. I would recommend exercising caution on using this low rated broker.

  24. Brian says:

    If you’re a serious trader, you want to reduce transaction costs, but you also need good fills. I believe Zecco sells its order flow (just like many of the other discount brokers), and executions may not be the best, which will cost the trader far more over time then saving $5-10 on a few trades. Also, if system response is slow during fast markets, a trader may suffer. If you’re not a trader, and just want to invest periodically without concern for slippage, then Zecco may be for you.

    As mentioned earlier, Zecco makes their money on your uninvested cash balance (pays you less then the market rate, and pockets the rest – of course, with rates so low, this doesn’t offer alot of income curretly), and their high margin rates. Zecco charges over 7% for margin, while trading firms (e.g. IB) charge ~1.5%.

  25. Chris says:

    Zecco is the WORST. Take it from a former customer; don’t use them.

    Not a scam, but you won’t make money with them. That’s the bottom line. You can’t make money when you have to worry about if their accounting practices are all above water, hidden fees, bad customer service, and a slow trading platform.


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