Tradeking is holding my money hostage

Recently, due to my tax loss harvesting transactions, I decided to move part of my portfolio to Tradeking and try them out.

Because Tradeking has an ACH limitation of $10,000 per transaction, I had to split up my transfers into chunks of this size or smaller to have my money transferred. Tradeking happily accepted the money without complaints. According to their website, all incoming ACH transfers are subject to a 10-day hold before withdrawal:

After several rounds of ACH transfers, I found that trying to keep track of which ACH has gone through, which has not, and keeping a constant reminder to submit an ACH everyday is too much of a chore. I called their customer service to see if they could initiate a transfer in a larger amount. This was flatly denied, never mind this is what their website says:

Next, I checked to see if they could reimburse my wire transfer since before sign up, their customer told me that this could be arranged in an earlier email:

We would cover the banks wire fee for your first wire, and depending on how much you fund with perhaps future wires as well.

This was also denied.

Frustrated, and deciding not to deal with a company that says one thing in their statements but in reality does another, I decided to take my business elsewhere. I wrote out two checks from my account and starting withdrawing my money by ACH, back to the financial institution which originally funded the Tradeking account.

All this went OK for a while until the day when I called to ask about and then requested to DTC out a position I have with Tradeking (DTC is an electronic transfer of shares from one broker to another). In the same phone call, I indicated my intention to move my business out from Tradeking. BIG MISTAKE.

From that point onwards, Tradeking essentially placed a lock-down on my account. They cancelled my ACH withdrawal requests without any notice. The online ACH withdrawal requests would be marked “processed” but money was never transferred. They then told me that they are going to put a 60-day hold on any withdrawals from my account and would freeze my DTC transfer out. The stated reason was “risk management” but I suspect the main reason is that this is one of those brokers which would drag its feet and give hell to any clients trying to transfer their assets out to another firm.

My account is flagged as restricted.

I am stuck with a sizeable cash balance being held hostage at Tradeking. While being stuck at Tradeking, they will earn a miserable 0.05% APY (see below) whereas I could have easily gotten at least 3.5% from one of the many online savings accounts. Obviously, Tradeking will gain from this freeze on my cash balance at my expense because kick-backs / 12b-1 / rebate arrangements from the cash sweep firm back to the brokerage firm are fairly common.

Miserable Yield in Tradeking\'s Cash Sweep

Crappy Sweep Account Yield of 0.05% APY at Tradeking

I have already tried a few times to get Tradeking to at least return my cash balance but without success.

My only choice now seems to be to wait out the 60 days and then DTC out the position. I am wary however, because I don’t know what other tricks Tradeking will throw at me when I re-submit the transfer out request 60 days later.

If you are planning to sign up with Tradeking or even already have an account with them, I urge you to re-consider carefully because you might have to go through a lot of hassle getting your money back. When you ACH your money in, at the point of transfer, you are told that there is a 10-day hold before you can withdraw it. But if they do not like you in future, they will conveniently cite some “risk management” reason and hold your money hostage for a long time.

In my opinion, Tradeking should not mislead investors by stating a 10-day hold for ACH transfers. They should state clearly that there is a 60-day hold on ACH deposits before it can be withdrawn. At least investors would be able to decide for themselves beforehand if they want to ACH their money to Tradeking and do business with such a broker. If this 60-day hold statement was there, I wouldn’t touch Tradeking with a 10-foot pole.

Weblinks: [1] [2]

Keywords: complain, complaints, sucks, issues, problems, cash balance, ACH, wire, review, overview, shady.

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15 Responses to “Tradeking is holding my money hostage”

  1. TFB Says:

    I’m so sorry to hear about your troubles. I’m happy with my experience with Fidelity. Not the cheapest, but predictable.

  2. indexfundfan Says:

    Thanks TFB. Fidelity and Vanguard would be two reputable firms, and I can usually trust them to make things right even if something goes wrong.

  3. JustSurfing Says:

    Wow, I almost wanted to open an account with them to get the $50 bonus. Thanks for the warning.

  4. Mike Says:

    Man! I’m sorry hear of your troubles, and lack of recourse.

    I actually once thought of using Tradeking, but it sure ain’t gonna happen now. I’ll stick with Vanguard, even with the extra costs.

    Hey.. have a Happy Holiday!

  5. indexfundfan @ indextown » Blog Archive » Tradeking changes its ACH holding time to 60 business days Says:

    [...] indexfundfan @ indextown Personal finance and investing in mutual funds and ETFs « Tradeking is holding my money hostage [...]

  6. indexfundfan Says:

    Thanks Mike. You might also read how now Tradeking says that the ACH holding time is 60 business days:

    http://www.indextown.com/archives/2008/12/13/tradeking-changes-its-ach-holding-time-to-60-business-days/

  7. Don Says:

    Sometimes it pays to get an attorney involved.

    I would also think at some point state and federal regulators can be helpful.

    I don’t know how long “recently” is, but certainly at some point further steps make sense. I’d consider them the way I think about insurance companies.

    1. always record your telephone calls with them
    2. always follow up in writing

    You should take care with how you say things on the phone and in writing. Essentially, if you have to sue or go to arbitration, what you want is a record that says you were reasonable and they were abusive. You want a judge to get mad on your behalf.

    You’ve already learned the hard way not to “break trust” with your agent. You need that relationship to work so they can help you get it straightened out. In my experience, any kind of threat just shuts them down cold.

    They already know you want to close your account, so you’ve burned that bridge. Perhaps expressing your frustration and intent to work cooperatively could help rebuild rapport; you’ll probably have to walk close to the line, “I don’t see anything short of state or federal regulators that could help get this straightened out, but really I just want this to be resolved without fuss.”

    And don’t forget that there could be something outside their control holding things up. You were making maximum daily deposits and then withdrawals, a la money laundering. Since 2001, the US has had a bit more of a “guilty until we’ve checked” attitude than in the past. Perhaps you’ve just been stung. If there are law enforcement people involved (that you don’t know about) nothing you could say to the agent is going to make a bit of difference. You could threaten all of the government oversight you like, but they are already on the case…

  8. indexfundfan Says:

    Don, thanks for your comments. At the moment, I intend to let the account “age” a bit; then I will submit another request to transfer out.

  9. indexfundfan @ indextown » Blog Archive » Higher new fees at Tradeking Says:

    [...] my bout of issues (Tradeking is holding my money hostage and Tradeking changes its ACH holding time to 60 business days) with Tradeking, I haven’t [...]

  10. indexfundfan @ indextown » Blog Archive » Tradeking releases my shares Says:

    [...] This is an update to my previous post “Tradeking is holding my money hostage“. [...]

  11. indexfundfan Says:

    jh, yes, I received back my shares/funds. See

    http://www.indextown.com/archives/2009/02/26/tradeking-releases-my-shares/

  12. Geroge Says:

    Tradeking is the worst broker worse than Zecco and I never thought I’d say that given all the problems Zecco had when they first started, I’ve never had so many issues with a broker in my 22 yrs of trading
    but then again I never thought I’d see the Dow at the 6,000 level.

  13. Hondaddy Says:

    I have not found one financial institution that holds an ACH for more than 30 days. TradeKing’s fine print of 60 days for a ACH to be transferred out is one of a kind and I will not be recommending them ever to anyone!

  14. Some Guy Says:

    Thanks for the warning. Due to recent screw-ups at Ameritrade, I was going to move to TradeKing. It sounds like that would have been a disaster. What good are low fees if you have to put up with this kind of garbage?

  15. Edward C Says:

    I should have read your warning. I actually have the same problem as you trying to withdrawal my money and switch to a different broker. My biggest deposite is actually a Bank Check but they treated the withdrawal request like I ACH in the Money subject to the rules of an ACH withdrawals.

    This is definately a dishonest company when it comes to trying to keep your
    Business. Basically their business moto is; if you want to leave, we are going
    tie you up.