Hi John, I understand the rules very well now, My biiiig grouwllll is that neither Waterhouse nor Jack White bother to tell you this at the start up of your account number one, and number two, why on earth would your account info say that your buying power was thus-and-so if it really ( by SEC rules) wasn't that amount?
A very good friend of mine got raped on the knuckles by Jack White and consequently asked to see the SEC rule that forbids this practice. The friend has an MBA and is an active tax consultant to several firms. He has about 25 years in the accounting and tax business with 10 years in the investment analysis and broker related business. He reviewed the SEC rules that were alleged to contain this information and there is no such animal. When he articulated this to Jack White there was no response. We both feel that there was no response because it is just not there.
I trade with Datek now, on the first three days of last week I traded BLS 11 times with each trade being my entire account, margin included. On some trades I might have had a cash balance of $100 or so. The question is why, if it is against SEC rules, am I not in the penalty box trading with Datek? I haven't changed my SSN and since last October I have made in excess of 300 trades and on each trade I max out my account.
Datek is not the only house that allows this type of trading, there are several others that do the same thing.
The only rational explanation of this that I have heard so far is that the brokerage houses are very sensitive to "churning". The SEC raped the brokers on the knuckles a few years ago for churning their accounts just to run up the brokers fees and this is what our accounts look like. You can imagine the broker that calls the client and says you ought to buy so-and-so stock because it is going up, and a few hours later sell it and tell them something else is now the hot stock. If you just look at the activity on our accounts, this is what it appears like to the brokerage house.
The only problem I have with this explanation is that I have a difficult time imagining Jack White or Waterhouse trying to protect the little old lady from the big bad churning broker. Fox watching the chicken coop don't you know!! Also, mine is a, or was a cash account with no margin and I am not a broker, it said so in my disclosure form.
So in short if their customer agreement doesn't say anything about it, the SEC rules are not available in plain English on it, Datek and other firms allow it, and no ones software precludes it I must assume that Jack White and Waterhose just want to profit from it! Motive = money!!!
If someone out there can show these assumptions/statements to be wrong I will gladly stand corrected. I would really like to know the absolute truth of the matter. Maybe someone from Jack White or Waterhouse would care to join in on the conversation????????
One mans view, I'll appreciate others.
Thanx Paul K. |
