e*Trade

On Monday morning - that again changed to margin call of 1.6 million! My positions were all hedged against all directions and maximum possible loss as per their own risk analysis was 150K even with extreme movements. I tried reaching to several people but no one could explain to me how can they generate 1.6 million call. Without informing me they closed out my short deep in money calls in CMG while stock was going down in my favor. Within 2 days stock fell another 40 dollars rapidly and I could have closed those positions at about 70-80k profit had they not forced sell themselves.

They also had choice of closing out far out of money short calls which was significantly higher in count but they targeted most deep in money calls which would have given me significant profit. This company is either colluding with market makers, or has its own positions against client positions and they create artificial margin call situations to profit at expense of client losses. This needs to be audited and investigated by SEC. I'm in the process of higher a lawyer and putting in a formal complaint to SEC.

When I got off from work I called e*Trade asking why my stock was sold without my permission. e*Trade rep told me they will investigate and let me know the findings. The fishy part stock went up another 10 dollars after the earning released same day. I am very suspicious if e*Trade is making money out of my money? e*Trade told me my account will be locked for further investigation. Really what?

If there was anything I would suggest they change, it would be that they tell us if the interface with our banks does not exist rather than just looking like a timeout. When it failed 3 times, I went through the deposit process. This was at 1 PM yesterday afternoon. By 8 PM, the deposits had been sent and by 6 AM this morning, they showed on my bank statement. By 8 AM, my account was verified and the money transfer process started. From my perspective, it went pretty smoothly. I like the process more for ensuring I don't give them the wrong banking information and my money goes somewhere else than for the security aspect, but the process is definitely more secure than UBS, who we were with before. So far, I give them 4 stars (would be 5 if I could set it up so that any cash in my account automatically moved to my banks, but I can live with doing it manually.)

The only option available is to use the "Authorization by Deposit" method, and punch in the two sub-$1 amounts after they arrive. The website shows 2-3 business days for this to happen, while fellow employees have noted 2-3 WEEKS. Until the account is verified, I cannot touch the non-trivial amount of money sitting in my e*Trade account. A boon for e*Trade, because they can earn interest on my cash. Happy accident for them? I think not. If I had any choice in the matter, I would NOT be using e*Trade. As it stands I will never willingly do business with them outside of what my employer has contracted for.

e*Trade is also constantly changing the margins on specific stocks to promote trading. They will use the excuse they feel you are too concentrated in a certain area. That is at their discretion, or more accurately the discretion of the low wage workers they hire to evaluate your account. If you use their 25% margin option they offer, they will raise it as soon as you do. I rarely go below 50% on my margin when I use it, but this does not stop their margin department from raising the margin requirements between 35%-55% on specific stocks due to increased concentration in the account. Even if raising the margin will have no effect on your concentration. Math is clearly foreign to them.

Then there is their timing and erratic policy changes. They recently raised the margin on my BAC stock 21 minutes after market closed on one day, only to raise it back the next day 3 minutes after the market opened. No trading took place in my account during this period. Nothing changed in my account to warrant such erratic policy changes. Like what could I have done anyway between market closed one day and market open the next day, even if I wanted to.

It is just the most inept company I have ever dealt with. Trying to explain things to them over the phone is like talking to a child. Their answers are scripted and it is clear they have little to no trading experience when you talk to them on the phone. I often have to prompt them to use google so they understand trading terminology. e*Trade makes thousands on my accounts each year, and I will be moving my accounts to a new broker. I would not recommend e*Trade to my worst enemy. Worst brokerage service I have had to deal with. They will lose my business as a result.

Seven days ago e*Trade suspended, and then closed, my account on the pretext of suspicious activity (i.e attempting to add the external account). It was claimed by e*Trade that they had information that the external account was associated with fraud; and abruptly closed my e*Trade account. It is not clear to me how they came to that conclusion, as the external account is with one of the largest banks in the US, and provided no explanation or evidence of wrong-doing on my part (as there was none) or of the external bank.

Prior to the account being suspended I had initiated a transfer of funds (a non-trivial amount) into my e*Trade account. When the account was closed I attempted to recall the funds, but was unsuccessful. I am now advised by the sending bank that the funds were transferred successfully to my (now closed) e*Trade account; and they have provided a federal trace number as evidence. e*Trade however maintain that since the account is closed they have not, and are not able to, receive the funds; which is in contradiction to evidence provided by the trace.

To try and sort out the mess created by the abrupt closure of the account I've called e*Trade every day for the past week, sometimes more than once a day - each time having to run the call center gauntlet of security questions and interrogation by the new person I speak to - to try and resolve the multitude of difficulties the account closure has created. This has consumed multiple hours of aggravation; having to appraise each new customer support individual of the issues at hand, and being placed on hold or transferred to individuals unable to resolve these issues as they have arisen.

With regard to the missing funds, it is now one week since I initiated that associated transfer yet there is still no acceptance on e*Trade's part that they have received the funds, where they have gone, or when they will be returned. I am exasperated with the lack of progress and don't know what else to do. The best e*Trade can advise, as we head into the second week of this debacle, is to call back in 24-48 hours.

There were only two choices: sign the agreements or have my account held hostage. e*Trade held my account hostage for about a week and then somebody in e*Trade used their brain and allowed me to opt out of real time quotes, because e*Trade apparently got numerous complaints about their behavior. I was locked out of my account during an extremely volatile time in the market but could not access my account to protect my assets. A corporate manager offered me $100 for my inconvenience and losses. I told him that was an insult because I lost several thousand dollars during the time I was locked out of my account. I filed a complaint with the SEC. I'm still waiting to hear what the SEC is going to do. My guess is nothing. The e*Trade compliance analyst wrote up a brief analysis of the issue and said e*Trade would do nothing to make me whole. The analyst lied about things I said.

I complained to the CEO of e*Trade. Now e*Trade has told me I have to move my account. I was planning to move my account anyhow but thought what kind of firm screws over a 21 year customer and then asks them to leave? I suggest to anyone thinking about opening an account at e*Trade to think twice. There are far better brokerage firms to have your account than e*Trade. e*Trade actually states the following: "e*Trade Securities reserves the right to block my access to the Service without notice, for any reason or for no reason." Think about that when you ponder opening an account with e*Trade, because e*Trade can and will block access to your account. I know that from experience.

Updated on 04/18/2018: After writing about my problems with e*Trade holding my account hostage (4/4/18) I thought of a couple other negative aspects to e*Trade when compared to some other brokerage firms:

1. Some companies offer a DRIP program where an investor owning shares of equities in the company can reinvest the distributions at a discount to market price. When the investor purchases and holds shares of those equities through a brokerage firm the investor can still participate in the DRIP program, but only if the brokerage firm participates on the investor’s behalf. I hold an equity from a company with a DRIP plan discount and I hold that equity in two brokerage firms, Fidelity and e*Trade.

Fidelity automatically participates in the company’s DRIP plan and my shares are automatically reinvested at the discount price (currently a discount of 2.5%). e*Trade does NOT participate in the company’s DRIP plan and distributions are reinvested at market price. While this doesn’t add up to a lot of money, a 2.5% discount can amount to a fair chunk of change if you have a lot of shares or if you hold that equity for a long time. The point is some brokerage firms watch out for their clients and try to maximize their client’s earnings while other brokerage firms twiddle their thumbs and do little to help their clients. Every dollar counts, so why go to a brokerage firm that isn’t willing to work for you?

2. I transferred my account from e*Trade to Ameritrade. It’s a decent sized account. Ameritrade promptly assigned a financial consultant to my account. I also have a financial consultant with my Fidelity account. e*Trade never assigned anyone to my account in the 21 years I had my account with them. It was strictly a bare-bones effort by e*Trade. It was like they couldn’t be bothered with trying to help a client. But considering their overall lack of knowledge (my opinion) it might well be better that they don’t try to help.

The overall lack of assistance by e*Trade didn’t bother me because I mostly do my own thing. HOWEVER, when some problem arises (as it did at e*Trade) it’s nice to have a name you can call and get some help fixing the problem. I did not have that with e*Trade. When e*Trade locked me out of my account I had no one I could contact except customer service and most of e*Trade’s customer service people are poorly trained. Sometimes they don’t even respond to a secure message, sometimes they are late in responding, sometimes they totally miss the point. After my experience with e*Trade I am very glad the other two firms have a financial consultant assigned to my account. Those two firms show some class that e*Trade simply doesn’t have, based on my recent experience.

e*Trade took months to ‘copy’ the functionality to another platform just to create a piece of garbage with an awful not user friendly platform. I spent a lifetime designing financial systems and made many suggestions on platform improvements none of which got implemented. e*Trade messed up my taxable transactions by mistakenly changing cost basis to zero. After I brought this up – the Cost Basis department intervened and manually added another transaction that erroneously increased the cost basis by $71,000. From what I read from in other customer complaints – many had a similar experience. Today is March, 11 but e*Trade still did not deliver all 1099 forms for 2017. Stay away from e*Trade - other brokerages - Fidelity, Ameritrade, TastyWorks have competent employees and treat customers better than e*Trade.

I give it a day. Call back and now it takes up to 2 weeks to receive it that way so I had to write a letter and upload it with signature and instructions on how I would like to receive my money. This is **. I shouldn't have to jump through hoops to get my money back. This place is garbage. I'm glad I still have FIDELITY. Way better than e trash. Customer service is just as garbage as this company.

Before I transferred my accounts to e*Trade, I called a customer service rep with several questions. One being if I could set up automatic quarterly distributions to a nonprofit charity - my church. The rep spent several minutes researching and I think checking with her supervisor. She came back on the line and said no problem, but that I would have to include a separate letter in addition to two forms. After the accounts were set up and activated, I completed and uploaded two forms plus a separate letter they said was required.

Two weeks later and no distribution, I again contacted customer service: "Oh, we (the back office) can't do automatic distributions to a charity, you have to resubmit the paperwork each time". I asked why they hadn't notified me of that. The reply "you should receive a message in the next day or two!" Yeah, Sure! BTW, one of the forms I submitted has boxes to check that indicate it is for automatic and quarterly distributions. There is no mention on the form that it is not allowed for charities or that it is only allowed for transfers to another account I might have at e*Trade.

Frantically I call customer service - e*Trade claims they cannot verify my info and my account in "locked" for my safety. Need to send them a copy of social security to unlock. I tell them you allowed me to trade earlier but now I can't get out. Dangerous situation - over the course of a 45 min call they continue to refuse to unlock it. Tell them I'm a repeat customer so they look into it and will call me back.

11am no response and I call them back. A new rep keeps putting me on hold, I'm down about $2k now still needing to get out of the position. Comes back, "this is our process we can't do anything about it". 3pm and I'm on the phone again. Now down $5k. New rep offers me to get on the line with one of their traders and try to "bust" the trade (ie: reverse it somehow). I ask them why I wasn't offered this earlier. Trader doesn't want to do it since he would be losing money... "sorry can't be done". Well then why did you offer it? 6pm and I get home and finally able to upload my SS card via the mobile app. But now down $6k and very frustrated with the whole experience.

Day 2: Market opens up +400pts and I can get out at a minor loss, at least better than the day before. MY ACCOUNT IS STILL NOT ACTIVE. Call them and get the response "we see your uploaded SS image, but operations will take 2-3 days to get this sorted out". I tell them I need to get out of this trade! They said I might be able to place it over the phone but I will have tax implications where my money could get trapped for 1+ years because of the SSN issue. WHAT? I tell them to expedite my account verification.

12pm. Get a call saying my account is finally active. Try to log in online and via app and STILL NO ACCOUNT. 1pm. Get another call saying my account is active and I am so irate at this point. Turns out e*Trade randomly changes my login into something obscure without ever informing me and need to get that fixed.

3pm. Finally my account is there, now down $10k. I call in demanding some recourse, close my trade at a loss since I don't want to take weekend risk and market feels weak. They said they'll launch an inquiry and see if they can get investment credit back to my account. I say okay. Day 4 (following Tuesday): Different departments are still reviewing the inquiry when I call in. I lay it out very clear. I'm a repeat customer. If there was an error in SSN why did the acct clear for the first trade? I just wanted to cover/close my position and you offered no help. They say they need more time to review - but rep says he understands.

Day 6: Get a call final decision is "we did everything correctly and are unable to assist you in your situation". Rep sounds very sorry on the phone but probably knew this was going to be the answer from the beginning. Overall - beyond losing $10k right off the bat, e*Trade customer service is absolutely horrendous. Robotic answers, constant "let me place you on hold". This ordeal was at least 5 hrs of phone time with 5 different reps. BEWARE. This is a terrible brokerage that can lock your account at a whim leaving you exposed to market conditions. I would avoid them at all costs.

Upon insisting for an explanation I was transferred to another more aggressive rep who matter-of-factly informed me I wasn't a big enough investor to them. He said if I had a few millions with them, they wouldn't have sold... They use margin as a trap to sell your shares. They benefit massively because they wait for intra-day fluctuation to sell your position for cheap. While they did email before they sold the shares, the email is generic and with a general subject line.

Instead of titling it something along the lines of "Margin Call" it simply says customer service, a boring cut and paste message with no details in the body but you miss it and they sell your shares. Overall I'm frustrated, lost a lot of money due to E-Trade's intra-day margin call trap. Hopefully someone will avoid the mistake I made with E-Trade. For peace of mind and unless you're a professional trader watching your positions all day, strictly trade cash. E-Trade margin trap is simply not worth it.