Is E*TRADE Safe?
E*TRADE from Morgan Stanley is one of the most well-established online brokerage brands in the industry. Even with E*TRADE being a
household name, some people may still wonder whether E*TRADE is legitimate, whether it is a scam, and
whether it is safe to use. We answer those questions and also review E*TRADE’s commissions and pricing,
trading platforms, research tools, and more.
E*TRADE began around 40 years ago and has long claimed to be one of the pioneers of online trading for retail investors. Most Americans are probably familiar
with the brand E*TRADE from its famous baby commercials during Super Bowl broadcasts. In the investment world, E*TRADE has a strong reputation for its powerful, user-friendly trading tools and platforms.
In late 2020, Morgan Stanley acquired E*TRADE in an all-stock transaction that was valued at around $13 billion at the time. E*TRADE now lives under the Morgan Stanley ownership umbrella, although it still operates under the E*TRADE name, website, tools, and mobile apps. In E*TRADE’s last fiscal year of 2019, prior to being acquired by Morgan Stanley, it reported processing over 291,000 daily average customer trades, having over 7.2 million total accounts, and producing close to $3 billion in total revenue.
E*TRADE Better Business Bureau (BBB)
The Better Business Bureau serves as a classic starting point for trying to figure out whether a company is legitimate. E*TRADE has a profile with the BBB but is not accredited with the BBB. Don’t be alarmed by this, as many legitimate financial firms choose not to pursue BBB accreditation.
E*TRADE’s current BBB profile shows a D- rating and 437 total complaints in the last 3 years, with 127 complaints closed in the last 12 months. BBB says the rating is affected by the company’s failure to respond to hundreds of complaints. To help put these numbers into context, E*TRADE has millions of customers. Therefore, that number of complaints still breaks down to a small percentage of customers, but the BBB rating and unanswered complaints are worth reviewing before opening an account.
Is E*TRADE Legitimate?
If you are worried about E*TRADE being a legitimate broker, you can rest assured that there are plenty of regulators overseeing the business. With E*TRADE operating in the financial industry and handling people’s money, there is significant regulatory oversight and many rules that it must constantly follow.
Today, E*TRADE self-directed brokerage accounts are offered through Morgan Stanley Smith Barney LLC, which is a registered broker-dealer, registered investment adviser, and member of SIPC. Some of the regulatory organizations involved with the business include the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), and the U.S. Financial Crimes Enforcement Network (FinCEN). E*TRADE also provides financial disclosures and account documents on its website.
Is E*TRADE a Scam?
E*TRADE is not a scam. Current E*TRADE from Morgan Stanley brokerage services are offered through Morgan Stanley Smith Barney LLC. The older E*TRADE Securities LLC registration with CRD number 29106 and SEC number 8-44112 is no longer the active registration for E*TRADE retail brokerage accounts. FINRA’s BrokerCheck report for E*TRADE Securities LLC shows that the firm is no longer registered with FINRA or a national securities exchange and that it ceased doing business on December 14, 2023. E*TRADE accounts were moved under Morgan Stanley Smith Barney LLC as part of Morgan Stanley’s post-acquisition integration.
Is E*TRADE Insured?
For assets held in E*TRADE from Morgan Stanley brokerage accounts, Morgan Stanley Smith Barney LLC is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects customer accounts up to $500,000, including up to $250,000 for cash claims. SIPC protection applies if a SIPC-member broker-dealer fails and customer cash or securities are missing. SIPC does not protect against market losses.
For checking and savings accounts offered through Morgan Stanley Private Bank, N.A., FDIC coverage depends on the account type. Max-Rate Checking, Checking, and Morgan Stanley Private Bank CD accounts are FDIC insured up to $250,000 per depositor. Premium Savings Accounts may be FDIC insured up to $500,000 per depositor once certain conditions are satisfied. Federal Deposit Insurance Corporation (FDIC) insurance protects eligible bank deposits against the failure of an insured bank.
E*TRADE from Morgan Stanley brokerage accounts also use a Bank Deposit Program for eligible cash balances. Cash swept into participating banks through that program may be FDIC insured up to $500,000 for individual accounts and $1,000,000 for joint accounts, once certain conditions are satisfied.
Morgan Stanley also maintains excess SIPC insurance. The current excess policy has an aggregate firmwide cap of $1 billion for securities and a $1.9 million per-client limit for uninvested cash.
Is E*TRADE Secure?
E*TRADE delivers numerous ways of protecting customers’ accounts, privacy, and data. E*TRADE protects customers’ accounts by following the SEC’s Customer Protection Rule. The rule requires fully paid customer securities to be segregated from Morgan Stanley’s own assets.
E*TRADE also offers its Complete Protection Guarantee. The guarantee states that E*TRADE will restore losses that happen in eligible accounts resulting from unauthorized use of the account. The guarantee also says that E*TRADE won’t sell personal information to third parties or marketers for any purpose.
The security measures that E*TRADE enforces to protect accounts and privacy include dedicated fraud protection teams, firewalls, and encryption. The optional security tools that E*TRADE provides to customers include two-factor authentication (2FA) and security alerts via text messages and/or emails.
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Is E*TRADE a Scam or Legitimate? The Verdict.
Based on the evidence, E*TRADE is clearly a legitimate company and not a scam. E*TRADE from Morgan Stanley operates within a highly regulated financial-services structure and appears to take customer account safety seriously. E*TRADE has account insurance, various account security protocols, and a strong reputation in the brokerage industry.
Trading and Investing
Investors at E*TRADE can open self-directed brokerage accounts that provide access to a decent list of financial products. These include:
- Equities
- Options
- Futures
- Funds (mutual, exchange-traded, closed-end)
- Fixed income
E*TRADE also offers budget investment-advisory accounts through its Core Portfolios program. These managed accounts are overseen through a digital investment-advisory program that makes the investment selections; ETFs and mutual funds may be used.
A variety of account registrations is available at E*TRADE. Expect to find retirement accounts, joint accounts, custodial accounts, education accounts, and small-business plans.
Through E*TRADE’s parent company, a large suite of full-service brokerage and managed accounts is available. These high-end accounts can be opened through Morgan Stanley and come with many services that traditional investment accounts receive, including planning and advice from licensed Morgan Stanley financial professionals.
Cash Management
With the assistance of Morgan Stanley Private Bank, E*TRADE has rolled out a useful selection of banking
features that its investing customers will definitely want to take a look at. Checking and savings
accounts get FDIC insurance with no monthly fees on the basic checking and savings products and competitive interest rates.
E*TRADE’s Max-Rate Checking account refunds ATM fees and foreign transaction fees worldwide, while its basic
checking option offers nationwide ATM fee refunds. Either account gets a debit
card.
Certificates of deposit (CDs) are available, although a brokerage account has a larger selection through
brokered CDs.
Then there is the line of credit; this service uses eligible securities in an E*TRADE brokerage account
as collateral for loans that can be used for many purposes.
For a holistic experience, bank and investing accounts are conveniently linked at E*TRADE with a single
login.
Website
Speaking of a single login, E*TRADE’s website is user-friendly and contains a lot of useful resources. A good place to begin is on the dashboard, which is the software’s default location. Drop-down menus at the top make navigation easy, and when it comes time for trading, the Markets & Ideas tab is a good place to start researching.
Equity profiles on the E*TRADE site have analyst reports from a variety of stock watchers, including TipRanks and Argus; some of them have price targets and trade recommendations. Charts have all sorts of gadgets and gizmos, and the site’s order ticket has several trade types.
For a more advanced experience, E*TRADE offers Power E*TRADE. This is a browser-based trading platform that delivers more charting and order tools. For example, there are more technical studies and order types. The link to Power E*TRADE is underneath the Trading tab.
Desktop Platform
E*TRADE now offers Power E*TRADE Pro for desktop trading. This downloadable platform is designed for active traders and offers a high level of customization, advanced charting, Level II market depth, multi-monitor layouts, and many technical studies. E*TRADE Pro, the older desktop platform, is being retired, so active traders should focus on the newer Power E*TRADE Pro platform.
Mobile App
For mobile traders, E*TRADE has two apps. Not surprisingly at this point, one of them is a Power E*TRADE platform. The regular app should not be overlooked because it has a lot of great resources, including trading, research, account-management tools, and banking features.
Margin
A brokerage account at E*TRADE can be established on a margin or cash basis. Margin opens up the possibility
of advanced option spreads, short positions, and buying securities on loan. Using margin, however, is fairly
expensive due to the broker’s interest-rate schedule, which starts at 12.45% and drops to 10.45% above $250,000 in debit balances. Above $500,000, loan rates are negotiable.
The E*TRADE website has a useful margin calculator on it; the gadget can be found on the Portfolios page, which itself can be accessed through the Accounts tab.
E*TRADE offers portfolio margin for accounts with $100,000 in assets and Level 4 options approval.
Additional Features
Fully-Paid Stock Lending Program: E*TRADE has one; you do have to sign up for it. To do so, log into the website and hover over the What We Offer tab. In the drop-down window, you’ll see the link for Fully Paid Lending.
IPO Lineup: E*TRADE also offers Initial Public Offerings. Look under the Trading tab for the IPO hub.
Dividend Reinvestment Plan: Brokerage customers at E*TRADE can set up automatic dividend reinvestments for their securities. Core Portfolios does this by default.
Fractional Shares: E*TRADE now discusses fractional-share investing and says investors can trade in specific fractions or dollar amounts. E*TRADE has also long supported fractional shares through dividend reinvestment and mutual-fund investing.
Recurring Purchases: Investors at E*TRADE can set up automatic investing in mutual funds, ETFs, and eligible stocks.
Individual Retirement Accounts: E*TRADE offers no-fee IRAs in several formats, including Roth, Traditional, Custodial, and Inherited. SEP and SIMPLE plans are available for small businesses. The broker’s website has several useful IRA calculators.
Extended Hours: Pre-market and after-hours sessions are available at E*TRADE for stocks and ETFs. Some ETFs trade overnight. Futures are also nearly 24-hour products.
Our Recommendations
Small Accounts: A brokerage account at E*TRADE has no recurring fees and no minimum account
balance. E*TRADE has also improved its fractional-share and automatic-investing capabilities, although
some competitors still offer a simpler fractional-share experience. A robo account has a $500 minimum; there are lower minimums elsewhere.
Charles Schwab,
for example, does better on some fronts.
Beginning Investors: An advisory account at Morgan Stanley or E*TRADE is a good way to start
investing.
Frequent Stock Trading: With its Power E*TRADE software, E*TRADE is a good choice for advanced equity
trading.
Retirement Planning and Long-Term Investing: E*TRADE’s IRAs and custodial accounts are a decent
way to start saving for the future. Adding a financial planner from Morgan Stanley is another good idea.
Mutual Funds: A brokerage account through E*TRADE works really well here. Expect to find thousands of funds open to new investors.
E*TRADE Review Summary
E*TRADE has a very thorough investment program that will please many demanding traders. There are a few weaknesses, though, so be sure to do some comparison shopping before choosing your next broker.
Updated on 6/10/2026.
Paul Johnson is a Licensed Stockbroker with 7+ years of experience in the financial services industry. Paul enjoys teaching about investing and writing about financial topics. He is a husband and father of twin boys.
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