Re: Zecco Sucks

[Qua$ar]

hey Andrew Mo I have a cash account currently in negative balance with
zecco, because they executed some option trades I placed on April 1st
and they liquidated them with a loss the next day that supposedly I
have to take. But isn't it a violation of the SEC regulations to give
'margin' to trade options in the first place? Please help, thanks.

On Apr 7, 12:16 pm, "Andrew Mo (localandbitter)"
<localandbit...@gmail.com> wrote:
> I will be filing an Arbitration claim against Zecco for different reasons,
> but would like to see what this group of wronged customers intends to do.
> Hopefully we can share information with each other.
> From my research, investors have limited abilities to raise class action
> suits against brokers due to federal law.
>
> Some quick things to point out:
>
>    - Zecco Trading, Inc. is based in the state of California.
>    - As a broker operating in California, it is subject to California's laws
>    and statutes in addition to federal laws.
>    - In the state of California, a broker/brokerage -- even an online
>    (discount) brokerage -- has a fiduciary duty to its clients. Discount
>    brokers do not have "discounted" responsibilities when it comes to the law
>    and practice regulations.
>
> I am personally tired of Zecco's customer service approach and default
> attitude of "Your account, your fault."
>
> The firm attempts to hide behind its limited and vague disclosure statements
> on its website and "supplemental account agreement." Keep in mind many of
> those clauses are void or unenforceable due to above mentioned reasons.
>
> Federal and state laws also prohibit any contract from absolving a broker of
> its responsibilities when it violates the law.
>
> Cheers.

[Qua$ar]

Yes I did sign this agreement (Level 1 and 2 options trading) but I
have a cash account,and they don't allow buying long calls or puts
with margin either

"Can I use margin to buy Options?"
No. Premiums for long options positions must be paid in full with
cash. Options spreads, however, are subject to margin requirements,
which are set by the Options Clearing Corporation (OCC)."

http://www.zecco.com/trading/faq.aspx?tab=trading&faq=6

On Apr 10, 2:21 am, "Andrew Mo (localandbitter)"
<localandbit...@gmail.com> wrote:
> (Disclaimer: This is not legal advice)
>
> Qua$ar,
> From Zecco's Options Trading agreement, it appears that customers are
> allowed to make some options trades without margin accounts (Level 1 and 2
> Options Trading). Did you sign this agreement?
>
> FINRA has a list of Prohibited Conduct you can use for guidance (Check out
> items #2 and #5)http://www.finra.org/Investors/ProtectYourself/BeforeYouInvest/Prohib...
>
> Cheers

[Qua$ar]

I know, i'm not looking for legal advice i'm just asking for your
opinions on the issue.

[Andrew Mo (localandbitter)]

(Disclaimer: This is not legal advice)

Qua$ar,

It sounds like you are trying to say that:

• On 1 April 209, you went long on Calls or Puts, but the purchase value of the long order exceeded your cash balance.
  
• The orders were improperly executed (on margin), based on purchasing power.

Is this correct?

If so, one would think that the improperly executed trades should never have gone through.

Also, for cash accounts why does zecco allow purchasing power to exceed cash balances in the first place?

I imagine this could have been a big problem for people that traded in their IRAs on April 1st.

Cheers.

On Thu, Apr 9, 2009 at 11:27 PM, Qua$ar <5qu...@gmail.com> wrote:

Yes I only had Level 1 and 2 options, but on their Margin FAQ it says
that it's against SEC regulations to give margin go Long on options,
it says the following:

"Can I use margin to buy Options?
No. Premiums for long options positions must be paid in full with
cash. Options spreads, however, are subject to margin requirements,
which are set by the Options Clearing Corporation (OCC).
http://www.zecco.com/trading/faq.aspx?tab=trading&faq=6

On Apr 10, 2:21 am, "Andrew Mo (localandbitter)"

<localandbit...@gmail.com> wrote:
> (Disclaimer: This is not legal advice)
>
> Qua$ar,
> From Zecco's Options Trading agreement, it appears that customers are
> allowed to make some options trades without margin accounts (Level 1 and 2
> Options Trading). Did you sign this agreement?
>
> FINRA has a list of Prohibited Conduct you can use for guidance (Check out

> items #2 and #5)http://www.finra.org/Investors/ProtectYourself/BeforeYouInvest/Prohib...
>
> Cheers

>
> On Thu, Apr 9, 2009 at 7:35 PM, Qua$ar <5qua...@gmail.com> wrote:
>

[Andrew Mo (localandbitter)]

(Disclaimer: This is not legal advice)

If the above is correct, I would expect that the liquidation of the purchased options to be a fair approach to rescind the trade, but you should not have to take any resulting losses.

The appropriate term for this should be "rescission," which is described as the following:

(law) the act of rescinding; the cancellation of a contract and thereturn of the parties to the positions they would have had if thecontract had not been made; "recission may be brought about bydecree or by mutual consent" [syn: recission] (WordNet® 3.0,  © 2006 by Princeton University.)

To properly rescind the trades, you would also be "made equal" to where you would have been, had the trades never occurred.

[Evan Damiano]

So people who have losses have to take them and people with gains have to give them back? That's F'ed up

[Qua$ar]

Hey Andrew Mo how can one fill an Arbitration claim? and is it
possible that all customers affected can fill an arbitration claim
together, kinda like a class action? because i'm pretty sure many
folks out there don't have the means to afford a good lawyer.


On Apr 10, 11:32 am, "Andrew Mo (localandbitter)"
<localandbit...@gmail.com> wrote:
> Evan,
> If rescission were applied, people with losses would have the losses covered
> by the faulty party. If people had gains, they should be allowed to keep
> them under the "benefit of the bargain" rule.

>
> On Fri, Apr 10, 2009 at 6:11 AM, Evan Damiano <e.dami...@gmail.com> wrote:
> > So people who have losses have to take them and people with gains have to
> > give them back? That's F'ed up
>
> > On Fri, Apr 10, 2009 at 3:34 AM, Andrew Mo (localandbitter) <

> > localandbit...@gmail.com> wrote:
>
> >> (Disclaimer: This is not legal advice)

> >> If the above is correct, I would expect that the liquidation of the
> >> purchased options to be a fair approach to rescind the trade, but you should
> >> not have to take any resulting losses.
>
> >> The appropriate term for this should be "rescission," which is described
> >> as the following:
> >>    (law) the act of rescinding; the cancellation of a contract and the

> >> return of the parties to the positions they would have had if thecontract

> >>  had not been made; "recission may be brought about bydecree or by mutual

> >>  consent" [syn: recission<http://dictionary.reference.com/browse/recission>]

> >> (WordNet® 3.0,  © 2006 by Princeton University.)
>
> >> To properly rescind the trades, you would also be "made equal" to where
> >> you would have been, had the trades never occurred.
>
> >> On Fri, Apr 10, 2009 at 12:16 AM, Andrew Mo (localandbitter) <

> >> localandbit...@gmail.com> wrote:
>
> >>> (Disclaimer: This is not legal advice)
>
> >>> Qua$ar,
>

> >>> It sounds like you are trying to say that:
>

> >>>    - On 1 April 209, you went long on Calls or Puts, but the purchase

> >>>    value of the long order exceeded your cash balance.

> >>>    - The orders were improperly executed (on margin), based on

> >>>    purchasing power.
>
> >>> Is this correct?
>
> >>> If so, one would think that the improperly executed trades should never
> >>> have gone through.
>
> >>> Also, for cash accounts why does zecco allow purchasing power to exceed
> >>> cash balances in the first place?
>
> >>> I imagine this could have been a big problem for people that traded in
> >>> their IRAs on April 1st.
>
> >>> Cheers.
>