Zecco a Scam? No, But Free Trades Not Worth It

August 18, 2008 at 7:27 am Filed under Reviews

When Zecco first opened its doors, it offered unlimited free trade with no minimum balance requirements. The idea was that you could make as many trades as you wanted and the business would be supported by advertising revenue. A little while later, they realized that was unsustainable and they went to ten trades a month with a minimum balance of $2,500. Some called it a bait and switch, others had already quit using the service because of its customer service woes, but overall they claimed that the vast majority of users never traded more than ten times.

At face value, Zecco was most appealing to day traders because it took away a major cost commissions. Zecco stood for ZE ro C ost CO mmissions, too bad they reneged on that mantra a bit. Many thought Zecco was a scam. but further research showed that was a legitimate firm and entirely honest. To my knowledge, there has never been any reports of anything but honest dealings from that firm.

If theyre legitimate, are they worth it? When they offered unlimited free trades, I thought they were worth dealing with the customer service issues. Smart Money magazine to rated them the worst in customer service in 2008. However, when you take away the very meaning of your name, going from unlimited to 10 free trades a month, you leave a bad taste in my mouth. It doesnt matter if I was never going to trade more than 10 times a month, Zecco promised free trades and no minimums to get me in the door. A bit of time passes and the minimum requirement is $2500 and the free trades are limited to ten a month.

Compared to other discount brokerage firms, Zeccos offer is no longer compelling. If you were to work with discount broker veteran E*Trade, you pay $9.99 a trade. However, the funds that arent locked up in shares can earn 3.30% APY in their online savings account. The benefit of Zeccos 10 free trades is worth $99.99 a month in that case.

However, lets go with the newer firm TradeKing. named Smart Moneys Best Discount Broker in 2006 and 2007 (in 2008, they did away with the Best Discount Broker category). TradeKing charges you $4.95 a trade. That brings Zeccos benefit down to $49.50 a month plus TradeKing has a ton of useful tools if youre interested in trading options.

The bottom line is that Zecco is legit but not worth it when you have such powerful competitors with better offers (plus those brokers have kept those rates as long as Ive known them, no bait and switch there).

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GHL Technologies CEO Charged for Pump & Dump Scheme

August 15, 2008 at 2:20 pm Filed under Investigations

The SEC announced today that it has frozen the profits from a trans-atlantic Pump and Dump scheme involving a company located in Washington, GHL Technologies, Inc. Its CEO, Gene Hew-Len, was also charged in the matter for issuing false press releases, and Francisco Abellan (aka. Frank Abel) for coordinating the scheme by mailing glossy brochures and mailings to two million US recipients.

GHL Technologies, later renamed to NXGen Holdings, Inc, installs GPS-based navigation equipment and its share price doubled after the promotional scheme. GHL also issued millions of shares to entities specified by Abellan and those entities sold their shares following the falsified report touting new contracts and millions in revenue.

The lesson here is that if you receive a promotional mailing tell you how awesome a stock is, chances are you should avoid it at all costs.

Following this concerted promotion campaign, GHLs stock price doubled and trading volume spiked nearly 1,500 percent. Abellan and his entities sold their GHL stock holdings for profits in excess of $13 million. The stock, which reached a high of nearly $9 per share at the height of the scheme, now trades at under a penny.

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SEC Permits Corporate Blogs as Public Disclosure

August 15, 2008 at 2:10 pm Filed under News

In a historic decision, the Securities and Exchange Commission has OKd the request of SUN CEO Jonathan SChwartz request to let corporations disclose through blogs, rather than traditional media and distribution channels.

Traditionally, disclosure has been very expensive. TechCrunch estimates that each disclosure costs a few hundred dollars, sometimes over a thousand, and so this will reduce that cost for most businesses. Interesting!