Zecco.com
Encyclopedia
Zecco.com is an online investing company with operations in San Francisco, California
and Pasadena, California
. Investors on Zecco.com have access to Zecco Trading, its stock
, option, mutual fund
and bond
trading platform. Investors also have access to Zecco Forex, which provides spot foreign exchange trading
as well as spot gold and spot silver trading. 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.
Zecco Trading initially provided customers with commission free stock trades (its name having been derived from zero commission cost). However, since March 2011, Zecco Trading no longer provides customers with free stock trades.
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.
Zecco Forex 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.
and MySpace
; this functionality includes items such as forums, blogs, groups, a customizable profile page, 1:1 emails, shout boxes and an activity feed.
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.
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
.
The data seem to show progress. Barron’s ranked Zecco with 3 stars in 2009 – compared to 2.5 stars in 2008. 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 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.
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. 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. 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.
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.
Originally offering 40 free trades per month with no account minimums, Zecco continually downgraded the "free trades" offer, and eventually eliminated it altogether. Beginning January 1, 2008, Zecco instituted a minimum balance of $2,500 to qualify for the free trades, and reduced the number of 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. The following year, effective March 1, 2009, Zecco raised the minimum balance for free trades from $2,500 to $25,000, 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.
Zecco soon began selling the securities purchased with the incorrect buying power, at the investor's expense ($19.99 for a broker-assisted charge). Several customers filed complaints with the SEC. The forum user rabi502 created a Google group calling for a class action lawsuit against Zecco.
Here is Zecco Trading’s more detailed explanation released on April 6, 2009:
. Topics covered include: Investing Basics, Fundamental Analysis, Technical Analysis, Call Options, Covered Call Options, and Put Options.
San Francisco, California
San Francisco , officially the City and County of San Francisco, is the financial, cultural, and transportation center of the San Francisco Bay Area, a region of 7.15 million people which includes San Jose and Oakland...
and Pasadena, California
Pasadena, California
Pasadena is a city in Los Angeles County, California, United States. Although famous for hosting the annual Rose Bowl football game and Tournament of Roses Parade, Pasadena is the home to many scientific and cultural institutions, including the California Institute of Technology , the Jet...
. Investors on Zecco.com have access to Zecco Trading, its stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
, option, mutual fund
Mutual fund
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
and bond
Bond (finance)
In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
trading platform. Investors also have access to Zecco Forex, which provides spot foreign exchange trading
Foreign exchange market
The foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
as well as spot gold and spot silver trading. 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.
Zecco Trading initially provided customers with commission free stock trades (its name having been derived from zero commission cost). However, since March 2011, Zecco Trading no longer provides customers with free stock trades.
Timeline of events
- February 2006: Company founded by former Merrill Lynch vice president, Jeroen Veth, and founder of successful wholesale derivatives broker IWB, Dino Van Es.
- July 4, 2006: First offering, a basic online financial community, launched out of the backyard of the founder’s rented LA home with 8 full time employees.
- October 9, 2006: Online brokerage offering Zecco Trading launched with notable financial media coverage due to the free trading offer and an accompanying media stunt where they offered “free lunchFree lunchThe phrase free lunch, in U.S. literature from about 1870 to 1920, refers to a tradition once common in saloons in many places in the United States. These establishments included a "free" lunch, varying from rudimentary to quite elaborate, with the purchase of at least one drink. These free lunches...
es” on Wall StreetWall StreetWall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
. - January 2007: Hired first of a series of industry veterans, Etrade marketing VP Gabriel Dalporto, to be Chief Marketing and Strategy Officer.
- February 2007: Addition of IRA account types and addition of 2-legged complex options strategiesOptions strategiesOptions strategies can favor movements in the underlying that are bullish, bearish or neutral. In the case of neutral strategies, they can be further classified into those that are bullish on volatility and those that are bearish on volatility...
. - May 2007: ZeccoShare community Beta launch
- November 2007: Launch of 3- and 4-legged complex options strategies and an options analytics suite.
- January 2008: Hired head of Etrade’s retail service operation, Michael Feser, to be President of Zecco Trading.
- April 2008: Hired Tradeking Chief Compliance Officer Francesco Matteini as CCO.
- April 2008: Launch of CEO blogBlogA blog is a type of website or part of a website supposed to be updated with new content from time to time. Blogs are usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in...
by Jeroen Veth, giving an insider’s view of Zecco and the founder’s philosophy. - May 2008: Hired ex-Schwab exec Michael Raneri as CIO.
- July 2008: Addition of analyst reports and online mutual fundMutual fundA mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
trading. - July 2008: Launch of online video education offering, the Zecco Zirens.
- September 2008: Zecco Trading and other brokers experienced downtime at the height of the financial crisis. Zecco Trading offered unlimited free stock trading for all customers in October 2008 as a goodwill gesture.
- March 2009: Zecco Trading increases the requirements to qualify for free stock trading to $25,000 in assets or 25 trades/month, $4.50 per trade otherwise.
- March 2009: Launch of bond trading and online chat for customer service.
- April 2009: Launch of spot foreign exchange marketForeign exchange marketThe foreign exchange market is a global, worldwide decentralized financial market for trading currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends...
trading through Zecco Forex. - April 2009: Company experiences technical glitch that temporarily gives some customers $6–12M in buying power.
- July 2009: Launch of spot gold and silver trading through the Zecco Forex.
- July 2009: Over 160,000 opened brokerage accounts and 250,000 community members.
- January 2010: Michael Raneri takes over as CEO. Former CEO Jeroen Veth joins Board of Directors.
- February 2011: Zecco announce they no longer offer free stock trades, while increasing their commissions to $4.95 per trade.
Features
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:- Stock, options, mutual fund, and bond trading;
- Real-time positions and balances;
- Quotes, research, and analytics;
- Fee-based features such as streaming data and tax reporting.
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.
Zecco Forex 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.
ZeccoShare community
The online financial community on Zecco.com is called ZeccoShare. It shares much of the common core community functionality found on sites like FacebookFacebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
and MySpace
MySpace
Myspace is a social networking service owned by Specific Media LLC and pop star Justin Timberlake. Myspace launched in August 2003 and is headquartered in Beverly Hills, California. In August 2011, Myspace had 33.1 million unique U.S. visitors....
; this functionality includes items such as forums, blogs, groups, a customizable profile page, 1:1 emails, shout boxes and an activity feed.
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.
Commissions
- Online stock trades: $4.95; online trades for stocks and ETFs priced under $1.00 are $6.95.
- Options trades: $4.95 per trade plus $0.65 per options contract.
- Mutual fund trades: $10 per transaction.
- Bond trades: $4.50 per bond with a $22.50 minimum per transaction.
- Treasuries: $24.50 per transaction.
- Forex: bid/ask spreads as low as 0.7 pips depending on currency pair, size of account, and market conditions.
Regulation
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
Financial Industry Regulatory Authority
In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization . FINRA is the successor to the National Association of Securities Dealers, Inc. ...
(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
National Futures Association
The National Futures Association is an independent self-regulatory organization and watchdog of the commodities and futures industry in the United States. The NFA oversees and protects investors from fraudulent commodities and futures activities. The NFA also provides mediation and arbitration...
.
Criticisms
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 in 2009 – compared to 2.5 stars in 2008. This ranked them in the same category as Scottrade
Scottrade
Scottrade is a privately owned American discount retail brokerage firm headquartered in St. Louis, Missouri. Its Founder, President and CEO is Rodger O. Riney. Scottrade has 500 branch offices around the U.S...
, ahead of companies like Banc of America Securities
Banc of America Securities
Banc of America Securities LLC , based in New York City, was an investment banking subsidiary of Bank of America. The firm competed in both the domestic and international equity and investment banking markets, and pursued a strategy pioneered by Citigroup that combines corporate lending with...
and Wellstrade, but behind companies like OptionsXpress
OptionsXpress
optionsXpress Holdings, Inc. is a retail, online brokerage firm, headquartered in Chicago, Illinois, that provides brokerage services for options, stocks, futures, mutual funds, and fixed-income investments in the United States and internationally...
and Thinkorswim.
Zecco Trading’s customer service was sometimes criticized in the early days, while Zecco claims to have improved service 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.
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. 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. 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.
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.
Originally offering 40 free trades per month with no account minimums, Zecco continually downgraded the "free trades" offer, and eventually eliminated it altogether. Beginning January 1, 2008, Zecco instituted a minimum balance of $2,500 to qualify for the free trades, and reduced the number of 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. The following year, effective March 1, 2009, Zecco raised the minimum balance for free trades from $2,500 to $25,000, 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.
April Fools' incident
On April Fools' Day of 2009, many accounts were showing a multimillion dollar "buying power," Zecco's term for available margin. 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). Several customers filed complaints with the SEC. The forum user rabi502 created a Google group calling for a class action lawsuit against Zecco.
Here is Zecco Trading’s more detailed explanation released on April 6, 2009:
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.
Management team
The Zecco management team is composed of:- Chief Executive Officer: Michael Raneri, former CEO of MeeVee and a past Schwab executive who helped bring SchwabSchwabSchwab may refer to:People:* Albert E. Schwab United States Marine Killed in action WW2 Okinawa 1945 / Awarded Medal of Honor* Andreas Schwab , German politician* Andrew Schwab, lead vocalist for the rock group Project 86...
online in the 1990s. - President, Zecco Trading: Michael Feser, former head of E-Trade retail service who has held executive roles at BrownCo and USAAUSAAUnited Services Automobile Association is a Fortune 500 financial services company offering banking, investing, and insurance to people and families that serve, or served, in the United States military. In 2011, there were 8.4 million members. The company reported a net worth of $19.3 billion in...
. - Chief Compliance Officer & General Counsel: Francesco Matteini, former TradeKing compliance officer with additional experience at CinergyCinergy-History:Cinergy was created on October 24, 1994, from the merger of the Cincinnati Gas & Electric Company and Kentucky subsidiary Union Light, Heat & Power with Plainfield, Indiana–based PSI Energy ....
energy trading.
Investing education
Zecco contains basic stock trading and options trading educational resources on the site to train new investors. Zecco has also created a series of video tutorials dubbed the “Zecco Zirens” posted on the site and on YouTubeYouTube
YouTube is a video-sharing website, created by three former PayPal employees in February 2005, on which users can upload, view and share videos....
. Topics covered include: Investing Basics, Fundamental Analysis, Technical Analysis, Call Options, Covered Call Options, and Put Options.