LowTrades Charges $50 Inactivity Fee Two Times a Year: Traders Beware
Posted: Wednesday, March 03, 2010
by Mogama
http://www.mogama.info
It's a shame. I was attracted to LowTrades, a division of Success Trade Securities, because of their $5 commission per trade. I used an all-cash account and bought some penny stocks. I decided to hold on to the stocks, because selling them just don't make sense at this time. They are so dirt cheap.
During this buy-hold time, LowTrades, my brokerage firm, decided to change the rule of the game. They dispatched an email about charging an inactivity fee that's a fee for not trading, specifically for not being an addicted day trader, a mindless gambler on stocks, which would reap LowTrades a harvest of commission money at the compulsive day trader's losing expense. Yes, I knew they would get their money, but what I failed to realize was what length they would go to grab their 50 bucks.
Today, March 2, 2010, I took a peak at my account only to find it was $50 short. I knew none of my penny stocks had lost that much value. So I checked the transaction history. Lo and behold, a Sell order was executed on July 31, 2009. I was pretty sure I did not place that order, so I emailed customer service: "...Did you guys sell some of my stocks to pay $50 inactivity fee? I don't remember selling any of my stocks in 2009, but I noticed a 'Sell' transaction on 2009-07-31 for xxx shares of xxxx..."
Shortly, I received the following email from Client Relations at least I know they respond to email: "Dear Valued Client, Correct, xxxx shares of xxxx was sold out to cover a $50 inactivity fee on 7/31/09. Thank you for choosing LowTrades. We appreciate the opportunity to serve you. Jon Fishman, Client Relations, LowTrades a division of Success Trade Securities, Member FINRA | SIPC"
What a way to "serve" me!
I fired back with this: "Your inactivity fee is too high. How often do you charge this inactivity fee? Is it legal for you to sell my stocks without my consent?"
Jon Fishman replied: "Dear Valued Client, The inactivity fees are assessed every 6 months. Please see the Customer Agreement section of the attached application for further information regarding the payment of indebtedness. Thank you for choosing LowTrades. We appreciate the opportunity to serve you."
To which I responded: "Well, your inactivity fee is a rip off, pure and simple. There are other reputable brokerage firms out there that do not take advantage of their clients' funds as you do. Sorry, I can no longer consider LowTrades one of the honest, less-greedy firms out there to help traders. You've found a sneaky way to make up for the low $5 commission you charge per trade. You bite into our accounts to more than make up for the difference that other no-inactivity-fee firms charge. You guys should be ashamed of yourselves. Some of you Wall Street types just won't change your greedy ways, will you? You will lose more than the $50 you've forced out of my account, because I will warn other small traders to avoid doing business with LowTrades. This was NOT your policy when I first opened my account with you."
It's probably legal, though it is so wrong and immoral. What can I do? Well, I'm not totally helpless. I called Scottrade and asked, "Do you all charge an inactivity fee?" Scottrade said, "No, not even if your account has a zero balance. No inactivity fee ever."
Good thing is, my Scottrade account is still active. I'm moving whatever little is left in my Low Trades account over to Scottrade, before these Wall Streeters bite another chunk of $50 out of my cheap stocks account. Geez... Does their greed know no shame? Where can the little guy get a break from Wall Street's sticky fingers? I can't even keep their hands off my $50...
Lesson? Before you open a trading account, better ask if they charge an activity fee. And when you receive notice that your broker will start charging such a rip-off fee, move your account immediately. Or like me, you'll be whining, leaving Low Trades smiling as they eat into your trading profits.
PS: If you transfer your account, LowTrades will charge you another $50! Greeders!!!
PPS: On latest trades, LowTrades charged $7.95 for commission per order, not the $4.95 commission they advertised and I was expecting. Very sticky fingers... They keep moving the bar.
PPSS: A reader emailed me on July 15, 2010, saying, Low Trades ...sold some of my stock in October and charged a $25 commission - calling it a "Broker-Assisted" trade! Incredible! I never received any notification that this had happened ... I am, at this moment, filing a complaint with the FTC...not that it will help the situation but it may temporarily make me feel better!
During this buy-hold time, LowTrades, my brokerage firm, decided to change the rule of the game. They dispatched an email about charging an inactivity fee that's a fee for not trading, specifically for not being an addicted day trader, a mindless gambler on stocks, which would reap LowTrades a harvest of commission money at the compulsive day trader's losing expense. Yes, I knew they would get their money, but what I failed to realize was what length they would go to grab their 50 bucks.
Shortly, I received the following email from Client Relations at least I know they respond to email: "Dear Valued Client, Correct, xxxx shares of xxxx was sold out to cover a $50 inactivity fee on 7/31/09. Thank you for choosing LowTrades. We appreciate the opportunity to serve you. Jon Fishman, Client Relations, LowTrades a division of Success Trade Securities, Member FINRA | SIPC"
What a way to "serve" me!
I fired back with this: "Your inactivity fee is too high. How often do you charge this inactivity fee? Is it legal for you to sell my stocks without my consent?"
Jon Fishman replied: "Dear Valued Client, The inactivity fees are assessed every 6 months. Please see the Customer Agreement section of the attached application for further information regarding the payment of indebtedness. Thank you for choosing LowTrades. We appreciate the opportunity to serve you."
To which I responded: "Well, your inactivity fee is a rip off, pure and simple. There are other reputable brokerage firms out there that do not take advantage of their clients' funds as you do. Sorry, I can no longer consider LowTrades one of the honest, less-greedy firms out there to help traders. You've found a sneaky way to make up for the low $5 commission you charge per trade. You bite into our accounts to more than make up for the difference that other no-inactivity-fee firms charge. You guys should be ashamed of yourselves. Some of you Wall Street types just won't change your greedy ways, will you? You will lose more than the $50 you've forced out of my account, because I will warn other small traders to avoid doing business with LowTrades. This was NOT your policy when I first opened my account with you."
It's probably legal, though it is so wrong and immoral. What can I do? Well, I'm not totally helpless. I called Scottrade and asked, "Do you all charge an inactivity fee?" Scottrade said, "No, not even if your account has a zero balance. No inactivity fee ever."
Good thing is, my Scottrade account is still active. I'm moving whatever little is left in my Low Trades account over to Scottrade, before these Wall Streeters bite another chunk of $50 out of my cheap stocks account. Geez... Does their greed know no shame? Where can the little guy get a break from Wall Street's sticky fingers? I can't even keep their hands off my $50...
Lesson? Before you open a trading account, better ask if they charge an activity fee. And when you receive notice that your broker will start charging such a rip-off fee, move your account immediately. Or like me, you'll be whining, leaving Low Trades smiling as they eat into your trading profits.
PS: If you transfer your account, LowTrades will charge you another $50! Greeders!!!
PPS: On latest trades, LowTrades charged $7.95 for commission per order, not the $4.95 commission they advertised and I was expecting. Very sticky fingers... They keep moving the bar.
PPSS: A reader emailed me on July 15, 2010, saying, Low Trades ...sold some of my stock in October and charged a $25 commission - calling it a "Broker-Assisted" trade! Incredible! I never received any notification that this had happened ... I am, at this moment, filing a complaint with the FTC...not that it will help the situation but it may temporarily make me feel better!
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Top-level comments on this article: (1 total)I too was tagged the $50 inactivity fee. I was aware of this when they first announced it for I received the notice. I was with Lowtrades since 2006. I chose them over Choicetrade which I will soon regret. I thought the $50 fee will not affect me because I can always make at least two trades a year.I chose Lowtrades because they had the lowest commissions at that time and they do not not charge surcharges for any stock or any penny stock for that matter. I can trade million shares of penny stocks with no extra charge for only $4.95 but then came the $50 inactivity fee. I put a limit order to sell half of my BQI shares. The stock opened just above my limit price on 6/24 which was the high of the day but then it never came back up to that point at the close. I was out of town on vacation and I thought that my BQI shares executed when I saw BQI's activity that day. I was a happy camper. But when I came back home and looked at my account, my order did execute but the transaction was made on 7/1 where my limit price was also reached (btw since then BQI has dropped like a rock and is now a penny stock). I figured, no problem at least it executed.So I got my July statement and was surprised to see a $50 inactivity fee! I called Lowtrades and asked them why I was charged. They said that I did not make a transaction on the 1st 6 months of the calendar year. This really irked me because I thought that you can make two trades in any given day for the calendar year but the rep explained to me that they will charge $50 every 6 months in a calendar year of inactivity in your account. Maybe I should have read the fine print a little more carefully and even if I did I may have forgotten this rule in their policy but it was really fishy that they did not execute my trade on 6/24 and instead made the transaction on 7/1, a day after my inactivity fee came into effect!!I called Lowtrades and told them what happened. They said that by the time of my order, BQI price has dropped below my limit price on 6/24 so they could not execute it. They said they'll talk to the market maker and come back to me...a week later, they never did. I talked to another rep and she said that they do not have data on intraday trades and so I have to talk to the market maker and ask for that info to provide them the intraday prices of BQI that day that it was suppose to have been traded. I talked to Penson (the clearing agent of Lowtrades at that time)complaints department, but they said they can't do anything about it. They said that I can go to arbitration and contest it. I thought it was too much work and frustration that it wasn't worth it. Lowtrades tried to make it difficult and they hope you just give up on it, which I did. Those bastards can steal my 50 bucks and I hope they rot in hell for it and with it! The thing is, unlike commissions, you can't write off inactivity fees so it's a double whammy!Maybe Lowtrades was a bad thing for me because of the low commissions, it made me more of a gambler by trading more and I lost more money than I should. Since Lowtrades clearing agent changed to Legent, I have checked my history and learned that I was being charged some phantom fees totalling to almost $200. I complained about these and they all reversed it (except for that stupid inactivity fee that they caused). I should have sold all my stocks that time to transfer to Choicetrade who has no inactivity fee or Zecco who had 40 free trades a month at the time they came out. I did open an account with Zecco later but I have 0 balance there now since they took out the free trades. I lost some more again there! Then I vowed not to play penny stocks anymore unless the commission is free and I could not do that with my cuurent broker (WellsTrade) without incurring a hefty commission. That is actually good for me for it prevents me from gambling away my money.Scottrade by the way is great. Except for the higher commissions ($7.95) they are superior in many ways than other brokers and they don't tack you hidden fees. It's even free to transfer out. Zecco who was once the cheapest started charging maintenance fees on their IRA accounts and $4.50 commissions. I didn't think their free thing was sustainable anyway...maybe when the economy gets better but I doubt they'll bring it back...they have screwed their customers by changing their policy. They got customers for giving away free trades only to take it back and @#$@#&*ed many. As for Lowtrades, the hell with them, I hope they die!Please log in to respond to this comment.Well, JT, it looks like you had it much worse than I. Thanks for sharing your experience here. It might help someone else steer clear of these suckers. ~mogama~Please log in to respond to this comment.
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