Zecco Charged Me $4.50 Commission and Sent Me a Margin Call
Yesterday, I used my play money at Zecco to buy 66 shares of China Sunergy (CSUN). The purchase price was $3.29 and at the moment when I bought the stock, I had $221 cash in my account, enough to make the purchase which was valued at $217.14. The order went through, as it was supposed. Before the 66-share order, I was trying to buy 67 shares, but it was rejected because of “insufficient buying power”. So I had to lower the number of shares to 66. But that’s not the end of it.
This is morning, I got an email from Zecco with “Sell Out Notice” in the subject. The email says:
As a result of current market conditions, your account requires additional Margin Maintenance. If corrective action is not taken by 12:00 p.m. ET, we may liquidate securities in your account, at your risk, sufficient to bring your account into conformity with our Margin Maintenance requirements. If subject to liquidation, please know the securities will be liquidated “at the market” commencing shortly after the time set forth above (or as soon thereafter as is practicable). If your account has multiple concentrated maintenance or required maintenance margin calls, you may be sold out on the earliest due date for the sum of all calls. Any deficiency remaining following such liquidation will continue to be your obligation.
My account was never a margin account. I logged into my account and saw 6 cents debt. II had enough fund yesterday to buy the stock. Where did the debt come from? Apparently, in addition to the $217.14 for the stock, I was also charged $4.50 commission for making the trade. But I have been using this account for more than 1.5 years and I was never charged with a commission. Why all the sudden it came up now? So I decided to give them a call to find out exactly what’s going on.
Over the phone, I was told that I was charged the commission because my account value was below $2,500 at the time when I made the purchase yesterday. Since when they started to require that I have to maintain $2,500 in my account to get the 10 free trades a month? The CSR said the rule was changed at the beginning of the year when they reintroduced the $2,500 minimum to open an account and reduced the free trades from 40 to 10 per month. However, after going through my emails, I didn’t see anything says I have to maintain $2,500. The CSR pointed me to their FAQ page regarding the fee and said the rules were there for everybody to see. I have the account for a long time, am I supposed to read their FAQ to follow those constantly changing rules?. Regarding the free trades, here what it take sto get them:
How does Zecco Trading apply the $2,500 minimum account balance requirement to the free stock trade offer?
It’s simple – you get 10 free trades every month in each account with $2,500 or more of account net equity. If you have more than one account of the same type (individual, joint, Rollover IRA, Traditional IRA, and Roth IRA), you’ll get free trades in the first account of each type. $2,500 minimum account net equity refers to your Start of Day (SOD) account net total value of securities plus cash. If your account drops below the minimum, you only need to raise your net equity back to $2,500 or more and you’ll get free stock trades again next month. For instance, your Start of Day account value reaches $2,500 on October 15th, you receive 10 free trades for the rest of October, and you’ll receive 10 free trades per month thereafter as long as you maintain a minimum balance of $2,500. If your account balance falls below $2,500 on October 28th, you need to raise your account value back to the $2,500 minimum to get another 10 free trades in November. If your account value reaches $2,500 again at SOD November 6th, you pay $4.50 per trade from November 1st till November 5th but will get 10 free trades on November 6th.
Seriously, this is probably the most stupid rule I have ever seen because in some days of the month, I can trade for free but in other days, I cannot, totally depending on the market value of my stocks on the day before I make the trade.
And if I don’t have enough fund in my account to cover both the trade and the commission, why the order went through? Should it be rejected too? My first order of 67 shares was rejected because of the exact reason of not having enough fund.
Anyway, I ACHed $1 to my account to cover the debt. I probably won’t use this account again any time soon. I am getting sick of having to deal with them.
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