Zecco.com

Zecco

Type	Private
Founded	July 4, 2006
Headquarters	Burlingame, California, United States
Key people	Michael Raneri, CEO Michael Feser, President, Zecco Trading Peter Bardwick, CFO
Industry	Financial Services
Products	stock brokerage
Website	www.zecco.com

Zecco.com (Zecco Holdings, Inc) is an online investing company with operations in Burlingame, California and Pasadena, California. Investors on Zecco.com have access to online brokerage Zecco Trading, member FINRA and SIPC where they can trade stocks, options, mutual funds and bonds. Investors also have access to Zecco Forex, which provides spot foreign exchange trading as well as spot gold and spot silver trading. The company also has a financial community, ZeccoShare, where investors can share investing ideas and view others' verified trades and performance taken directly from the brokerage.

Zecco Trading was among the first online brokerages to provide customers with commission free stock trades. Currently, Zecco Trading provides customers with ten free stock trades each month when they maintain a minimum balance of $25,000. If that balance is not met, or the 10 trades are exceeded, the price is $4.50.

History

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 4th, 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 9th, 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 lunches” on Wall Street.
• 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 strategies.
• 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 blog 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 fund 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 forex 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.

Zecco Trading Features

The Zecco Trading brokerage launched with relatively simple online brokerage functionality and a limited service offering in 2006, but has since added many features. Currently Zecco Trading offers customers:

• Stock trading including limit orders and trailing stops
• Options trading including complex strategies such as spreads, straddles, condors, butterflies, etc.
• Online mutual fund trading and mutual fund screener
• Bond trading through a broker
• Real-time positions and balances
• Quotes and research (stock quotes, charts, analyst ratings, company financials, etc)
• Research reports provided by S&P
• Options analytics tools
• Stock alerts
• Streaming data platform (fees apply)
• Performance tracking and tax reporting tools (fees apply)

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 Features

The Zecco Forex offering 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, etc). Leverage is available up to 200:1, which means customers can control a $100,000 contract with just $500. It also means they can lose that $500 with relatively small movements in the underlying currencies. Zecco Forex customers can also trade spot gold and silver.iv

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 Facebook and MySpace like 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. 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: 10 free trades per month with a minimum of $25,000 in assets or 25 trades per month. $4.50 otherwise.
• Options trades: $4.50 per trade plus $0.50 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.(35)

Zecco Trading is a registered broker-dealer, member FINRA. FINRA (Financial Industry Regulatory Authority) is 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 NFA (National Futures Association).

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

Initial reviews of Zecco were mixed. Zecco Trading went from concept to live online brokerage in a matter of 8 months. Perhaps inevitably, it launched 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, ahead of companies like Bank 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.

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 Trading has also undergone criticisms for its accounting methods, which are seen as inaccurately portraying daily balances and trade executions.

Many users expressed frustration after some customers were accidentally given up to $13 million in buying power on April 1st, 2009. Zecco Trading explained this as a technical error and has said only customers who egregiously abused the extra buying power were being held responsible for their trades. However, Zecco any 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.

Zecco raised the minimum to qualify for free stock trading to $25,000 or 25 trades per month effective March 1st, 2009, upsetting many customers.

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 Schwab online in the 1990s.
• President, Zecco Trading: Michael Feser, former head of E-Trade retail service who has held executive roles at BrownCo and USAA.
• Chief Financial Officer: Peter Bardwick, formerly with Salomon Brothers and Citicorp. Has held CEO, COO, CFO and board positions with public and companies including CBS MarketWatch and infoUSA.
• Chief Compliance Officer & General Counsel: Francesco Matteini, former TradeKing compliance officer with additional experience at Cinergy 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 YouTube. Topics covered include: Investing Basics, Fundamental Analysis, Technical Analysis, Call Options, Covered Call Options, and Put Options.

External links

• Zecco.com
• Zecco Brokerage Review
• Zecco Fees and Margin Rates