Is Firstrade Safe?

Firstrade isn’t a brand new broker; they’ve been around for a bit but arguably are not as well-known as the likes of TD Ameritrade or Vanguard. It’s natural to want to conduct additional research and reviews on a lesser-known broker to make sure they are developing a good reputation with their clients and the business community. If you are wondering whether Firstrade is a safe broker to open an account with, this article should assure you that it is and explain why.

Firstrade’s Better Business Bureau Rating

We searched the Better Business Bureau’s listings and found Firstrade’s BBB profile was created back in 2001, but Firstrade has actually been in the brokerage business since 1985. They have an impressive BBB rating of A+, which is in part based on the nature of any complaints made against the company, how long they’ve been in business, and how transparent they are with customers. Firstrade is not currently accredited by the BBB, but this isn’t alarming because BBB accreditation is something that a company must apply and pay for and many solid businesses don’t bother with this.

Despite the strong A+ rating, they only have one customer review on their BBB profile. This customer gave them one star out of five, noting that they were charged a $75 fee to transfer their account to another brokerage. This is not concerning to us, as if you read the fees section on Firstrade’s website, they clearly state that there is a $75 fee for outgoing account transfers, and this is actually quite standard across most brokers.

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Is Firstrade SIPC Insured?

The Securities Investor Protection Corporation (SIPC) is a non-profit, federally-mandated, self-governing organization that all U.S. brokers must be members of. The SIPC insures the assets in your brokerage account for up to $500,000 (half of which can be used to cover cash) in the event Firstrade goes bankrupt and is unable to furnish your account assets. Firstrade is a U.S. broker and therefore is also a member of the SIPC, and therefore your Firstrade account automatically receives this coverage.

Is Firstrade FDIC Insured?

Similar to what the SIPC is for brokers, the Federal Deposit Insurance Corporation (FDIC) is for consumer banks. It is a government agency that insures consumer deposits at member banks in the event that their bank fails and is unable to honor client deposits. The FDIC was created in 1933 during the Great Depression in order to restore the public’s trust in the nation’s banking system. Americans had lost trust in banks because many of them didn’t keep enough cash on hand to honor a large volume of client withdrawals at the same time, and the FDIC solved this lack of trust by insuring checking and savings balances.


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The FDIC only insures checking and savings accounts at member banks, and because Firstrade is a broker and not a bank it doesn’t qualify for this protection. However, we should point out that Firstrade has a cash sweep program where they automatically sweep any uninvested cash balances from your brokerage account into this deposit program, which is FDIC-insured. So behind the scenes, the unequitized cash in your Firstrade account is both protected by SIPC and FDIC insurance, and the non-cash assets in your account are protected by SIPC coverage.

Is Firstrade Regulated by FINRA and the SEC?

The Financial Industry Regulatory Authority (FINRA) is a non-profit self-regulating organization whose goal is to ensure the integrity of the securities markets by creating and enforcing regulations to protect consumers when they participate in the financial markets. Like most brokers, Firstrade is a member of FINRA (and has been since 1985), and their license number (or CRD number) is 16843. Firstrade is also registered with the SEC, which is a government agency that is responsible for legal oversight and enforcement of securities laws in the U.S.

Firstrade’s FINRA profile shows a total of eight disclosures, six of which were regulatory in nature. Generally you don’t want to have any disclosures listed on your FINRA profile, but given how long Firstrade has been in business this is not too surprising. You can browse the details for all of these disclosures on FINRA’s website. In the regulatory events we looked into, FINRA documented that Firstrade didn’t do enough to prevent money laundering and to monitor for and identify potentially suspicious trading activity in related customer accounts. One example cited where multiple related customer accounts apparently attempted to manipulate a penny stock’s price through numerous cross-trades.

Firstrade’s Founders and CEOs

Firstrade was founded by John Liu in Flushing, New York in 1985. John Liu is still the company’s CEO today and has seen it grow to more than $2.3 billion in assets since its founding. It wasn’t until August of 2018 that Firstrade got rid of commissions on most trades, competing with the likes of Robinhood, and this is likely a reason for its renewed popularity.

Is Firstrade Safe Conclusion

There is nothing that suggests Firstrade is not a legitimate broker. They have been in business longer than many and offer a great service for $0 commissions. Although there FINRA profile includes several regulatory disclosures, this appears to be FINRA slapping them on the wrist for not doing enough to monitor for suspicious activity among their customers and is not an issue where Firstrade is mistreating or doing wrong against its customers.

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Firstrade Safety reviewed by TopRatedFirms.com Rating: 5