Two pet peeves about Scottrade
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Two pet peeves about Scottrade All, Our club is over six years old, and barring the recent horrors in the market, done reasonably well. We have used Scottrade throughout. There are two functions ST allows me to do within my personal account that they do not allow for the club: 1. On-line deposits 2. Margin purchases My rep tells me it is a legal problem for them. Does anyone know if all brokers are hamstrung by this problem, or are there brokers who can offer a club these services? Thanks, Brad Burnett Treasurer, 8techsgrowling Investment Club Brad, I'm not 100% certain, but I believe clubs can buy on margin with www.firstrade.com We've used them for as long as you've used Scottrade, and the margin application used to be part of the club's application process. Margin can be a slippery slope for clubs, especially in these hard times. Better make sure every member understands what they are signing. Not everyone is savvy enough to grasp the concept--or the liability.
Firstrade also had ACH transfers. We keep a local bank account and tranfer funds back and forth, as needed. They make it pretty easy. Very club friendly.
Lynn Ostrem, VP
Crow River Investment Club
Be very, very careful about trading on margin. First, it may be a violation of your partnership agreement -- most prohibit taking on any debt. Second, it exposes your members to significant risk. In addition to the usual risk associated with trading on margin in a personal account, in a partnership, the creditor (broker) can (and usually will) go after the easiest and/or deepest pocket to satisfy a debt. It doesn't have to recover proportionally from each member. They would probably choose to go after those members with individual accounts at the brokerage.
Ira Smilovitz
In a message dated 11/11/08 23:39:51 Eastern Standard Time, bburne1@bivio.com writes:
Thank you -- we will check out Firstrade and see if it makes sense for us to switch. --Brad Thanks -- you are correct, we would need to modify our PA to allow margin activity. I should clarify we would not take on debt, per se -- we would only be purchasing while we waited for our deposit to clear. It is a frustratingly long process now. |
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