E*Trade has a legal obligation to "know their customer" because they are a registered Broker/Dealer. Because of their obligation they have to qualify customers who are purchasing stocks, options, etc. I'm sure if E*Trade could sell you pieces of the clear blue sky, they would and still get a commission. Thankfully, the SEC regulates brokerage firms to prevent them from doing this. As for your qualification, when you initially opened the account they probably asked you all of those questions anyway to try and qualify you for options, etc. With that information they could have gleaned that you weren't a likely candidate and shouldn't have sent you the letter. (hopefully they have this type of cross referencing in place) Otherwise it sounds like you opened a cash account instead of a margin account and they didn't have the info they needed to qualify you as a registered investor. Once they (E*Trade) were able to determine this they *had* to decline your request or you could take them to arbitration (and get money) because you could say that E*Trade should have known better than to sell an IPO to an inexperienced investor. How do you get around this? Either start investing more and gain the experience or....lie. The brokerage firm has no idea if you are lying and really doesn't care as long as you have signed a contract stating that you are experienced. Brokerage firms do not have access to other firms trading records. Thus you could tell them that you play Butterfly spreads and foreign currency sythetics for fun and they have to believe you. Red Hat has no clue who their IPO is being sold to. All they know is that E*Trade bought XX Million shares and E*trade is selling that many shares to customers. Do not be angry at Red Hat for a screwy system for IPOing securities. =) ...and lastly, since I'm at work and should really do something so they keep paying me. E*Trade is not the only one which is selling the IPO. Goldman Sacs is the primary underwriter. Of course you may have issues with their commissions.........
Slashdot Mirror
E*Trade has a legal obligation to "know their customer" because they are a registered Broker/Dealer. Because of their obligation they have to qualify customers who are purchasing stocks, options, etc. I'm sure if E*Trade could sell you pieces of the clear blue sky, they would and still get a commission. Thankfully, the SEC regulates brokerage firms to prevent them from doing this.
...and lastly, since I'm at work and should really do something so they keep paying me. E*Trade is not the only one which is selling the IPO. Goldman Sacs is the primary underwriter. Of course you may have issues with their commissions.........
As for your qualification, when you initially opened the account they probably asked you all of those questions anyway to try and qualify you for options, etc. With that information they could have gleaned that you weren't a likely candidate and shouldn't have sent you the letter. (hopefully they have this type of cross referencing in place) Otherwise it sounds like you opened a cash account instead of a margin account and they didn't have the info they needed to qualify you as a registered investor. Once they (E*Trade) were able to determine this they *had* to decline your request or you could take them to arbitration (and get money) because you could say that E*Trade should have known better than to sell an IPO to an inexperienced investor.
How do you get around this? Either start investing more and gain the experience or....lie. The brokerage firm has no idea if you are lying and really doesn't care as long as you have signed a contract stating that you are experienced. Brokerage firms do not have access to other firms trading records. Thus you could tell them that you play Butterfly spreads and foreign currency sythetics for fun and they have to believe you.
Red Hat has no clue who their IPO is being sold to. All they know is that E*Trade bought XX Million shares and E*trade is selling that many shares to customers. Do not be angry at Red Hat for a screwy system for IPOing securities. =)
Jayson Pifer