| Type | Private |
|---|---|
| Founded | July 4, 2006 |
| Headquarters | San Francisco, California, United States |
| Key people | Michael Raneri, CEO Michael Feser, President, Zecco Trading |
| Industry | Financial Services |
| Products | stock brokerage |
| Website | www.zecco.com |
Zecco.com (Zecco Holdings, Inc) is an online investing company with operations in San Francisco, California and Pasadena, California.[1] Investors on Zecco.com have access to Zecco Trading, its stock, option, mutual fund and bond trading platform.[2][3][4][5] Investors also have access to Zecco Forex, which provides spot foreign exchange trading as well as spot gold and spot silver trading.[6][7] It also operates a financial community, ZeccoShare, where members can share investing ideas and view others' verified trades and performance taken directly from the brokerage.[8][9]
Zecco Trading initially provided customers with commission free stock trades (its name having been derived from zero commission cost).[10] However, since March 2011, Zecco Trading no longer provides customers with free stock trades.[11]
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The Zecco Trading brokerage launched with relatively simple online brokerage functionality and a limited service offering in 2006, but has since added to the site. Currently Zecco Trading offers customers:
Zecco Trading customer service initially received mixed reviews with some customers complaining of long hold times. According to Zecco, Michael Feser was added to the management team to rectify this situation and Zecco reports increased staffing and reduced hold times as of June 12, 2008.[28]
Zecco Forex[29] in many respects is more sophisticated than the brokerage option. It includes an active trader platform with free, streaming real-time quotes, news and charts. It has visual click trading on 37 currency pairs and accompanying conditional orders (e.g., limit, one cancels other). Leverage is available up to 50:1 on major currencies and 20:1 on minor or exotic currencies, which means customers can control a $100,000 contract with just $2,000. It also means they can lose that $2,000 with relatively small movements in the underlying currencies. Zecco Forex customers can also trade spot gold and silver.
The online financial community on Zecco.com is called ZeccoShare. It shares much of the common core community functionality found on sites like Facebook and MySpace; this functionality includes items such as forums, blogs, groups, a customizable profile page, 1:1 emails, shout boxes and an activity feed.[30]
However, ZeccoShare is customized to investing and has many novel features as a result. For example, users can elect to share their verified trades, holdings, trade notes and performance taken directly from the brokerage as illustrated in the image on the right. Users can subscribe to (and follow) star performers’ trades, and discuss trade ideas with them. Zecco argues that this provides a level of transparency not found in previous financial communities which were rife with pump and dump schemes.[31]
Both Zecco Trading and Zecco Forex are subsidiaries of Zecco Holdings, Inc., but the two are subject to separate regulatory bodies.
Zecco Trading is a registered broker-dealer, member of the Financial Industry Regulatory Authority (FINRA), the primary regulatory body of the securities industry.
Zecco Forex is a separate but affiliated company from Zecco Trading. Zecco Forex is subject to regulation by the National Futures Association.
Initial reviews of Zecco were mixed. Zecco Trading went from concept to live online brokerage in a matter of 8 months, launching with a relatively basic platform and weak customer service. Over the years, Zecco Trading claims to have improved both the product and service.
The data seem to show progress. Barron’s ranked Zecco with 3 stars[33] in 2009 – compared to 2.5 stars in 2008.[34] This ranked them in the same category as Scottrade, ahead of companies like Banc of America Securities and Wellstrade, but behind companies like OptionsXpress and Thinkorswim.
Zecco Trading’s customer service was sometimes criticized in the early days, while Zecco claims to have improved service[35] more recently. Smart Money Magazine's Broker Survey seems to corroborate a turnaround in service quality: Zecco received one star in 2008 for customer service which improved to three stars in 2009.[36][37]
The low cost was seen as a trade-off for a less polished interface and simpler features than competitors.
Zecco Trading has also undergone criticisms for its accounting methods, which are seen as inaccurately portraying overall account performance, daily balances and trade executions.
Many users expressed frustration after some customers were accidentally given up to $13 million in buying power on April 1, 2009.[38] Zecco Trading explained this as a technical error and said only customers who egregiously abused the extra buying power were held responsible for their trades.[39] However, some customers felt they should have been able to keep gains but not be held responsible for losses.
As a reaction to website downtime at Zecco Trading and many other online brokerages in September 2008, Zecco Trading decided to cancel commissions on all stock trades for all customers during the entire month of October 2008 to compensate investors.[40][41]
Customers can only trade US markets at Zecco Trading. Zecco currently supports the AMEX, NYSE, NASDAQ, OTCBB, and the Pink Sheets.
Many account functions have fees associated with them, including $50 to transfer stocks to another brokerage (ACAT), $30 per year for IRA accounts, and $235–$575 to request stock certificates.[42]
At first, Zecco claimed that they could afford to offer free trades because they were making money on interest and premium services.[43] However, as the company grew, Zecco began downgrading and adding restrictions to "free trades" offer, and eventually eliminated it altogether. Beginning January 1, 2008, Zecco instituted a $2,500 minimum balance to qualify for the free trades, and reduced the limit on free trades from 40 per month to 10 per month, claiming that the majority of their customers trade less than 10 times per month anyway.[44] Zecco also raised the price for additional trades from $3.50 to $4.50 per trade. The following year, effective March 1, 2009, Zecco raised the minimum balance for free trades from $2,500 to $25,000,[45] effectively eliminating free trading for many customers. Finally, on February 25, 2011, Zecco announced they would no longer offer free stock trades - despite the origin of its name, zero comission cost. Zecco also raised their prices from $4.50 per trade to $4.95 per trade at that time.
On April Fools' Day of 2009, many accounts were showing a multimillion dollar "buying power," Zecco's term for available margin.[46] Several customers purchased securities with the incorrect margin balance, and initially the trades were executed. In some cases, individuals made a large number of trades worth millions of dollars. Here is Zecco Trading's initial response posted on the login page on April 1, 2009:
Some clients may experience incorrect display of Buying Power and Account Balances. Please know that in most cases you may view your correct Start of Day balances under Account Records on the trading platform.
If you need to confirm your Buying Power in order to place a trade, please email Customer Service at customerservice@zeccotrading.com or call 877-700-STOCK (877-700-7862). We thank you for your patience as we work to correct these issues.
Zecco soon began selling the securities purchased with the incorrect buying power, at the investor's expense ($19.99 for a broker-assisted charge).[47] Several customers filed complaints with the SEC. The forum user rabi502 created a Google group calling for a class action lawsuit against Zecco.[48] Here is Zecco Trading’s more detailed explanation released on April 6, 2009[49]:
Setting The Record Straight For April 1 On April 1, 2009, one of our vendors provided Zecco Trading with an incorrect data feed which caused some customers to see erroneously high buying power. This error was quickly corrected, but about 1% of our customers were impacted. All positions in excess of our customers’ true buying power have since been closed. Except in a very small number of egregious and fraudulent cases, customers will not be responsible for losses (or gains) incurred for trades in excess of their buying power. Additionally, we want to make it clear that contrary to some reports, this was not in any way intentional and was not an April Fool's joke. We take the integrity of our customers’ accounts very seriously and we have taken measures to ensure this does not happen again. We sincerely apologize to our customers if this caused any confusion.
The Zecco management team is composed of:[50]
Zecco contains basic stock trading and options trading educational resources on the site to train new investors.[51] Zecco has also created a series of video tutorials dubbed the “Zecco Zirens” posted on the site and on YouTube. Topics covered include: Investing Basics, Fundamental Analysis, Technical Analysis, Call Options, Covered Call Options, and Put Options.