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Is Etrade Safe and Legitimate Brokerage Firm or a Scam? Is Etrade SIPC/FDIC Insured? Etrade BBB Rating



Is Etrade Safe?


Financial headlines are rife with stories of frauds, hacks, bank failures ("Too Big to Fail" still hovers above the financial world like a bad dream), and people losing their life savings to unscrupulous con artists.

Recently, this hit home with Etrade when a trader went online with a public plea asking everyone to donate money to bail him out of a highly speculative trade that went bad overnight. His brokerage: Etrade.

Should we be worried that Etrade is crooked, or irresponsible, or unsafe to do business with? In the highly regulated financial markets, Etrade, like all online brokers and financial institutions, must meet certain requirements and operate within the law and all rules set up by governing agencies. Let's run down the list and see if Etrade is a scam or meets the standards.


Is Etrade a member of the Securities Investor Protection Corporation (SIPC)?


Yes. SIPC is the government organization charged with overseeing the liquidation of member broker-dealers that are the result of bankruptcy or financial trouble. SIPC works to see that investors in the troubled firm receive the assets in their individual accounts up to $500,000 per account, including a $250,000 limit for cash only.

Broker-dealers are financial institutions that offer customers securities such as stocks, bonds, ETFs, currency and commodity futures, options, and just about any other investment whose value fluctuates and trades on regulated exchanges. SIPC doesn't guarantee your investments will not lose value, only that your assets will be returned to you.


Is Etrade a member of the Federal Deposit Insurance Corporation (FDIC)?


Yes. The FDIC is the group that insures bank deposits. Any investor with a savings account, checking account, money market deposit account, or Certificate of Deposit (CD) held at Etrade in their banking division is insured for at least $250,000 per account. Since these investments earn fixed rates of interest and do not fluctuate in value, these investments are virtually guaranteed to the penny.


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Is Etrade a member of the Financial Industry Regulatory Authority (FINRA)?


Yes. Here is where fraud protection comes in. If an investor with Etrade believes someone in the firm has misrepresented a certain type of investment or individual security, or has cheated or committed outright fraud or embezzlement, that investor has recourse through FINRA to prosecute the case and have any stolen or lost funds returned.

It's important to note that FINRA is not part of the government. However, FINRA does work closely with the government's Securities and Exchange Commission (SEC) to monitor and police all securities markets to insure they run smoothly and fairly.


Etrade BBB Rating


Etrade Financial BBB (Better Business Bureau) rating is B-. To see Etrade BBB information details click on this link.


Etrade Review


Etrade rating

Read detailed Etrade investing account review or Etrade checking account review.


Is Etrade Scam?


With membership in all regulation bodies, guaranteed customer account insurance as well as good Better Business Bureau rating in mind, we are 100% confident to say that Etrade is not a scam.


Etrade Bankruptcy


Etrade is not in or close to bankruptcy. They have very profitable and sound business model.


Is Etrade Scam Conclusion


Etrade is a pioneer in the online brokerage business and is one of the largest brokers in the nation. It has a good reputation in the investment community. Etrade is a legitimate and safe brokerage firm.


Etrade Overview


Etrade Securities LLC, legitimate discount brokerage owned by Etrade Financial Corporation, is one of the largest online brokers in the U.S. They specialize in servicing self-directed investors, those who make their own investing and trading decisions. Etrade competes with other discount brokerages such as TD Ameritrade, Fidelity Investments, Merrill Edge, Charles Schwab, Scottrade, and Ally Invest.

When evaluating a discount broker, commission rates and fees are a priority, but other services should be considered as well. Online brokers have evolved to the point where most of them offer a full line of financial products and services comparable to what traditional full service brick-and-mortar brokers offered before the advent of the computerized trading revolution in the 1990s.

Etrade has grown and refined its line of products and services as it tries to keep pace with the demands of modern online investors. Below are some of the key features of an Etrade brokerage account.


Etrade Pro


Etrade Pro is the flagship web-based trading platform offered by Etrade. It's a customizable, one-stop resource for placing and executing trades; researching securities; monitoring stock news, accounts, portfolios, and watch lists; consulting historical charts as well as real-time charts; and conducting stock screens and developing trading strategies. Also, Etrade Pro provides access to live streaming TV channel and on demand videos from CNBC.


Is Etrade Scam?


Margin Rates


A big consideration for individuals who trade using margin is the interest rate charged on margin balances. These rates tend to be hidden by the brokers and forgotten by the investors. For traders with high margin loan account balances, margin interest can be a heavy drag on a portfolio. Etrade's margin rates, like most brokers' rates, are tied to a floating interest rate such as the "broker call loan rate," and fluctuate as interest rates rise or fall.

Etrade's margin rates are at the high end of the spectrum among discount brokers, but they offer reduced rates for larger margin loan balances, which brings the rate to the middle of the pack for heavy hitters with $1,000,000 or more in loan balance.


Free Trades


There may be no such thing as a free lunch, but some online brokers offer incentives to new customers such as commission-free trades for the first month or two. Other brokers will offer cash incentives such as rebates for transferring money into a new account.

Etrade offers a competitive incentive package of free trades for the first 60 days after an account is opened, plus up to $600 for transferring outside money into an Etrade account.


Commissions and Fees


Etrade's commission structure falls at the high end of the spectrum for infrequent traders, so those higher costs should be weighed against the added value Etrade offers in terms of amenities and customer service. Frequent traders (those making over 30 trades per quarter) get a much better pricing at Etrade.


Comparison of Brokerage Fees


Service, Commission, or Fee Range of most-popular brokers Etrade pricing Comparative cost vs. range for Etrade
Minimum Investment to Open an IRA $0-$2,500 $500 Lower than median
Fee to Open an IRA $0 $0 Lowest
Annual Custodian Fee $0-$20 $0 Lowest
Market order stock trade $6.95 $6.95 Highest
Limit order stock trade $6.95 $6.95 Highest
Option –1-contract $8.25-$21 $10.74 Lower than median
Option—10-contracts $15.45-$30 $17.49 Median
Mutual Fund— No load funds $0-$49.99 $0 Lowest
Mutual Fund— Transaction fee funds $0-$76 $19.99 Lower than median
US Treasury securities $0-$25 $0 Lowest
Corporate Bonds or similar $1-$38 $1/bond, minimum $10 Lower than median


Mobile Apps


With the explosion in popularity of smart phones and tablet computers, mobile trading has become more important for active individual traders. Most online brokers offer mobile trading apps for clients. Etrade's mobile app is highly regarded and has been an innovative leader. It works with Android, Apple, Amazon, and Windows devices.


Trade Frequency


If you're an active investor who makes a large number of trades per month (dozens vs. less than ten, for example), the overall commission and fee structure becomes important. Some companies will offer volume trading commission discounts, while others may not. An individual executing 200 trades per month and carrying a high margin balance may pay $2,000-$3,000 in commissions to a high commission brokerage. Trading with the same frequency with a low commission brokerage may cost less than $1,000. To all but the wealthiest investors, this difference is substantial.

Etrade offers discounted pricing to customers that execute at least 30 trades per quarter: $4.95 for stock and ETF trades, and reduced, $4.95 ticket charge plus 50 cent contracts for options traders.


Is Etrade safe?


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Customer Service


When something goes wrong with a trade or you have trouble with your account or the trading platform, excellent customer service will often save the day. Etrade has earned a reputation for quick, responsive customer service over the years, so those who place a high value on service should consider this broker.


Is Etrade Legitimate Summary


Etrade is safe and legitimate brokerage company. It is a major player in the discount brokerage field. Commissions on equities and options are higher than average which will turn away many investors. If cost is not the deciding factor, Etrade is one of the best brokers for retail investors that offers a wide variety of amenities and services.