Charles Schwab - trouble with penny stock purchase - commission higher than expected

Charles Schwab - trouble with penny stock purchase - commission higher than expected

Charles Schwab

Posted on TheComplaintStation.com, 2/2/04:

I opened an account with Schwab. I had a particular stock in mind that I wanted to buy. The check cleared. I called to find out the commission that I'd have to pay, and found out that, since the stock was under $1.00, they'd charge 3% over the web, or $55 PLUS 4% if they did it live. Since I planned to buy around $15,000 worth of the stock, that meant around $500 in commissions. The rep I spoke to, however, said that Schwab would negotiate a commission rate with me if I were not a day trader, which I am not. Cursing myself for not having asked Schwab about their commission rates before I opened the account, I decided to place the order anyway, since I mostly live overseas, planned to hold the stock over the long term, and it would be a colossal pain in the neck to transfer the account. However, when I placed the order, Schwab's website refused to execute it. Instead, it returned an insulting message that "You have $0.00 to trade penny stocks." When I called to complain that I knew what I was doing, and they should remove the penny-stock block from my account, they refused. While I was at it, I tried to negotiate a commission rate as the first rep had suggested. In response to this request they closed my Schwab One account to prevent me from electronically transferring the money out to another brokerage. They claimed I had a bad credit report, which must be mistaken, and is irrelevant because I am not trying to borrow money from them. The matter was transferred to the "Risk Department". They spent several days "investigating" whether my check had cleared. When I got impatient with the run-around, they transferred the complaint to the "Chairman's Division". The "Chairman's Division" said that they were still investigating the matter, and they could not say how long it would take. They asked for the name of someone at my bank who could verify that the check had cleared. I declined to furnish this information on privacy grounds, because it is unheard of that a purported financial services firm can't tell if they have received credit for a check in what is supposed to be a customer segregated account, and I am not responsible for their mismanagement. In an attempt to resolve the matter, I e-mailed an electronic copy of the cancelled check to the "Chairman's Division." No help -- the "Risk Department" is still "investigating". Another call to the "Risk Department" induced someone to blurt out that in fact they knew last week that the check had cleared, but the matter was with the "Chairman's Division" and "Risk Department" could not resolve the matter. So I called back the "Chairman's Division" and told them that the cat was out of the bag, and they might as well turn loose of the money. Still no soap -- they must complete their "investigation", and cannot tell with certainty when that might be. Meantime, today, I got an e-mail notice today that my Schwab statement was online. Out of curiosity, I went to look at it, as it would be evidence that my check cleared. But the coverup boys at Schwab have doctored the website to say that I have no account, although my login and password still work. I have now spent 6 hours over the past week on international long distance (at $1.33 per minute) from where I live in Africa trying to get one trade placed, first with Schwab, and now with someone else. If you like this kind of service at uncompetitive prices, by all means invest with Schwab. For myself, when Schwab turns loose of my money (as eventually they must), I will short the stock. You might try it yourself -- with management like this, the company must decline substantially.

Follow-up:

2/2/04 Pursuant to my nightly phone call, Matt Neil of Chairman's Division promised to call me "first thing in the morning" on February 3rd.

2/3/04 First thing in the morning came and went. No call. Called Chairman's Division twice. Matt Neil could not come to the phone. No-one else could help me.

2/3/04 Sent e-mail to Matt Neil stating that if I did not get word within 24 hours that Schwab was releasing my money, I would update my complaint, and send it to another Web-based complaint site.

2/4/04 A.M. My time zone in Africa is 11 hours ahead of Schwab's San Francisco office. They are aware of this, as I have talked to almost every person in the Chairman's office, some of them multiple times, and they don't get too many callers from Kenya. Sometime around 3:00 a.m. my time, Matt Neil called and left a voicemail saying that he had "information" for me.

2/4/04 P.M. Nightly call to Chairman's Division uncovers that Matt Neil is out sick today. As before, no-one else can help me. Rob Scott of Chairman's Division informs me that "Matt has been calling around on this, but no-one here has a final resolution" -- in other words, they still don't know or profess not to know whether my check has cleared.

Sent the above to Email User, with copy to Email User

Mitchell M

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