Zecco.com
Zecco.com is an U.S. online investment brokerage and investor portal. Zecco stands for "Zero Commission Cost". Zecco's stated philosophy was to eliminate commission fees. Zecco was among the first online investing websites that allowed for any trades without a commission. Currently, Zecco Trading allows for ten free trades a month in exchange for a minimum balance of $25,000 in March 2009. If that balance is not met, or the 10 trades are exceeded, the price is $4.50. Zecco.com was founded by Dino Van Es , a Netherlands based entrepreneur, in October 2006. Dino Van Es is also responsible for the launch of Gekko.com. Gekko matches users to hotels and restaurants, based on user profiles and on the preferences of like-minded people in the community.
Community
Zecco.com was the second investing website to allow (but does not obligate) users to disclose their portfolios and performance publicly in the user forums after Tradeking, which launched with these capabilities in December 2005. Zecco profiles are given a stated objective, for instance "Speculation" or "Growth". In theory, this disclosure allows users to seek out high performers with similar objectives.
Features
Zecco lacks more of the advanced features of some other companies. Zecco does have live tracking, but it does not auto-refresh nor does it tell you your actual cash balance as the firm is plagued by frequent vender and server glitches. Zecco offers some of these features, but charges extra fees. This makes Zecco less suitable for investors or people with more unified portfolios. . .
Criticisms
In Smart Money Magazine's 2008 Broker Survey, Smart Money named Zecco as one of the worst in the customer service category. .
Current Zecco customers complain AbOUT increased fees.
Many users left Zecco after the April Fool's incident, as Zecco had made personal profit off trades many users had unwittingly made believing them to be prank, by keeping the resulting gains in these trades but making some users responsible for their losses. It is unclear how many more times Zecco will do this to boost revenue.
Overall Reception
Reviews of Zecco have been mixed. When serious customer service issues arise, it occasionally seems like Zecco is lacking in this area. Many traders have glorified the $0 commission cost, as well as its low commission cost for traders ($4.50 per trade). Other investors, with just a couple of trades a month, find the interface to be lacking and would rather pay commissions to get better features. Zecco has also Undergone criticisms for its accounting methods, which are seen as inaccurately portraying daily balances and trade executions.
Another hindrance to Zecco's growth is its refusal to trade international markets and stocks. Even stocks on the OTCBB that are not US-based may not be bought. Zecco currently supports the AMEX, NYSE, NASDAQ, OTCBB, and The Pink Sheets. Zecco is further hindered by its small short inventory, which does not allow many options for bear market investors.
As a reaction to the significant website downtime in Summer 2008, Zecco has decided to cancel commission on trades during the entire month of October 2008 to compensate investors.
From the Zecco web site 2/2/08:
"I'm writing to tell you that as of March 1st, 2009, we're increasing the minimum level of assets needed to earn 10 free trades per month to $25,000."
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 fraudulent trades were executed. In one case, an individual made 97 trades worth $11 million and according to an NYSE trading desk, all orders traded on the floor. Zecco's official response implied that the large buying power was caused by a system glitch:
Important Message from Zecco Trading:
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 created a forum to discuss the issue, although was otherwise silent on details of how the error occurred. Zecco soon began selling the fraudulently purchased securities, at the investor's expense ($19.99 for a broker-assisted charge). Several victims filed complaints with the SEC. The forum user rabi502 created a Google group calling for a class action lawsuit against Zecco .
On April 6, Zecco clarified that the problem was not an official April Fools joke:
UPDATE:
In both the Zecco Forums and external blogs some people are insinuating that Zecco Trading pulled a bad April Fool's joke. Please be aware that is factually inaccurate. In no way Zecco Trading was trying to be funny regarding such a sensitive matter as your buying power or account balance, nor would it even consider doing this.
On April 6, 2009, Zecco explained the cause of the problem:
Please read this important Zecco Trading notification:
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.
Zecco later admitted to users in writing that they had kept the profits of anyone who made money off the erroneous trades but made others responsible for the losses.