Is Moomoo a scam

Is Moomoo a Scam or Safe and Legit? (2024)


Is Moomoo Legitimate?


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. Should we be worried that Moomoo is crooked, or irresponsible, or unsafe to do business with?

In the highly regulated financial markets, Moomoo, 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 Moomoo is a scam or meets the standards.


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


Yes. Here is where fraud protection comes in. If an investor with Moomoo 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.


Moomoo BBB Rating


Moomoo does have a BBB (Better Business Bureau) page. Their rating is F. It is based on just a few cases.


Is Moomoo a Fraud?


Is Moomoo 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 Moomoo is not a scam.


Moomoo Bankruptcy


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


Is Moomoo Scam Conclusion


Moomoo is a legitimate and safe brokerage firm.


Moomoo Review


Having established that moomoo is a real and safe brokerage company, it’s now time to take a look at the investing services it offers—and does not.


Tradable Assets


Moomoo Assets Rating

Moomoo currently offers a small range of investment vehicles. They include:

  • Stocks
  • Options
  • ETFs
  • Closed-end funds

Although this is a rather short list, the stockbroker does offer ADRs and access to three foreign stock exchanges: Shanghai, Hong Kong, and Shenzhen.


Is Moomoo Stock Safe?


Fees and Commissions


Moomoo Cost Rating

Moomoo has two pricing schedules, one for US residents and the other for residents of foreign countries.

US residents pay at Moomoo $0 for stock, ETF, and option trades. The broker charges no per-contract fees, which is a huge benefit for active derivative traders.

For clients who live outside the US, the equity commission jumps to 0.49¢ per share (with a $0.99 minimum). Options are 65¢ each with a higher minimum ($1.99).

Non-US customers must also pay platform fees for using Moomoo’s software. Clients can choose between fixed or tiered pricing; the former charging a minimum of $1 per order, and the latter charging fractions of a penny per share (depending on monthly volume).

All nationalities pay the same commission on Hong Kong trades (0.03% with a HK$3 minimum and a platform fee of HK$15).

One fee that all nationalities should know of is the $75 outgoing ACAT transfer fee. It is per security, an unusual policy. Transferring 3 stocks would cost you $225.


Education and Research


Moomoo Research Rating

Moomoo’s website has an economic calendar with upcoming IPOs, dividends, splits, and earnings announcements. These events can be sorted by a variety of criteria.

Next to the calendar is a collection of news articles. Some of these are from external sources like CNBC, while others are Moomoo’s commentaries on trading opportunities.

Moomoo’s software offers some very good stock analysis tools. On an entered ticker symbol on either the mobile app or desktop system, we found:

  • Short selling data
  • Technical trends
  • Backtesting
  • Price ratios
  • Analyst ratings with price targets
  • Financial statements with bar charts
  • News articles
  • Selections from Moo on that particular security
  • And more...

The desktop platform has a very good stock screener. Besides the American exchanges, it can scan the Chinese markets. It is located under the Opportunity tab.


ETF Resources


Moomoo ETF Rating

Besides stocks, Moomoo’s screener can also search for ETFs, including funds on the Shanghai and Shenzhen markets. But there aren’t many search criteria. It is possible to scan by region, industry, and asset class.


Moomoo Cons and Pros


Fund profiles unfortunately don’t have the same amount of data on them as their stock cousins. For example, we didn’t find any backtesting data or ratings from third-party analysts. ETF profiles do have margin details, option chains, capital flow trends, and news articles.


Other Services


Moomoo Services Rating

IRAs: Not available.

Fractional-share Trading: Moomoo’s very good software doesn’t yet offer whole-dollar trading.

Dividend Reinvestment Program: Despite Moomoo’s very good stock trading software, it doesn’t offer DRIP service...but it should!

IPO availability: On both the desktop platform and mobile app, there is a list of upcoming equity IPOs (on both American and Chinese markets) with release dates. Moomoo requires settled cash to sign up.

Extended Hours: Moomoo has a pre-market session that runs from 4 o’clock in the morning till the opening bell. It also has an after-hours period that closes at 8 in the evening.


Comparison


Moomoo Comparison

Moomoo’s foreign stock service does outperform many other broker-dealers in the U.S. marketplace. But it doesn’t outperform Interactive Brokers, who offers access to the Chinese markets and many more.

Despite its foreign stock offering, Moomoo’s investment lineup is rather small. WellsTrade offers mutual funds and bonds, while Robinhood has cryptocurrencies.

Our testing of Moomoo’s software proves that it is light years ahead of J.P. Morgan Chase and Firstrade, who offer only basic trading platforms. But Charles Schwab and Merrill Edge have better software.

Although Moomoo does offer very good stock analysis tools, the addition of free pdf reports would make them even better. Vanguard customers do have them.


Recommendations


Individual Retirement Accounts: Charles Schwab has a large selection of no-fee IRAs.

Beginners: Moomoo’s software is pretty hard to learn. Plus, its customer service is abysmal. We would take Robinhood instead.

Active Stock and ETF Trading: Although Moomoo does have a good desktop platform, so does Webull, who also has fractional-share trading, crypto-currencies, and $0 commissions on US-listed securities.

Mutual Fund Investors: Firstrade would be a good choice.

Long-Term Investors and Retirement Savers: Charles Schwab gets our endorsement here.

Small Accounts: Firstrade.


Moomoo Cons and Pros Verdict


Moomoo has an appealing name, but it seems to fall flat in actual trading services. We do like it for its margin rates, social networking, and access to Chinese markets. In all other areas, it is quite easy to find better options.


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Updated on 3/1/2024.


About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.