I have become increasingly alarmed at how one very famous brokerage firm, one of Clark’s favorites, has been locking up accounts, closing them, and even closing them and not returning the money to the customers, because they can’t “prove” the money is theirs. I have been lurking on Reddit reading posts, and it’s disturbing. To add insult to injury, the pseudo-bank fintech payment account run by this firm is not under the jurisdiction of the CFPB, it’s covered by FINRA, they are an industry group, they don’t intervene aggressively on behalf of customers, because they know who butters their bread.
I had gone all-in with this firm, trying to sole-source my financial life from them, but just yesterday I had the realization - this isn’t a good idea. I’m moving my payment account over from that one to another brokerage firm whose payment account is an actual bank account, so they are covered by FDIC and the CFPB. I’ll leave my retirement accounts in place, however.
I just have to move slowly… no sudden moves… or else they might lock up my account because they don’t like me trying to rip it away from them. But not too slowly that it looks like “structured payments”. It’s pretty sad when I have to think this way, isn’t it?
What people observe:
They don’t like it when you have a new account and you send money in, then send it out. They probably think it’s money laundering. Fine, but no one knows what “new” is, and what amounts, or frequency, or age of deposit they are concerned about, so everyone is in the dark.
Sometimes they don’t like large checks that get deposited, they will lock the account and ask the customer to get a Medallion Signature Guarantee (MSG) to prove that the issue of the check really issued the check, which as I understand it totally is not the purpose of the MSG, and vendors have refused to go through this exercise. If you sold a car to a car dealer, received a big check, and your check was rejected, do you think the car dealer would be overjoyed at having to prove the funds were not ill-gotten?
They don’t like lots and lots of little Venmo or PayPal transactions. Maybe they think you’re running a business through a personal account, when you’re just paying friends back.
There are other cases where no one has a clue why they locked or closed an account. And they won’t discuss it. It sounds brutal, especially if $1000s, $10,000s, or even $100,000s are involved. Some cases have dragged on for months or years. Can you imagine? That’s life-altering.