Is Public a Safe Brokerage Firm?

Public.com is a broker that has a slightly different approach to investing than most other brokers. The app, the process of buying stocks, and the social features are all quite unique. Given its differences from the norm, some may wonder if Public.com can be trusted or if it’s a scam. We’re here to tell you that Public.com is not a scam.

Here’s why.

Public.com Company Profile

Public.com is based in New York and Copenhagen. It received its first round of funding in 2018 from Greycroft and has several celebrity investors behind it.

Public.com is a broker that allows investors to trade many different types of securities. It focuses on the social dynamic of investing and promotes sharing knowledge and ideas across its platform. Users can follow other investors and be followed in return, and there are also many live events hosted by Public.com staff.

Is Public.com Legitimate?

One of the most obvious places to look when trying to discern whether a broker is a scam is how it adheres to regulatory organizations.

The most prominent regulatory bodies in the world of investing are the Financial Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC). Both focus on ensuring that investors have a secure place to conduct their business. Among the many regulations imposed by these agencies are rules obliging brokers to guarantee fair trade opportunities, protection of personal data, and transparent business practices.

Public.com is registered with FINRA and SEC.

Is Public App Safe?

Another way to see if a broker is trustworthy is by looking at the types of relationships it has with other businesses.

A broker’s clearing house is an example. Clearing houses are separate companies but work in tandem with brokers: one cannot survive without the other (unless it is a self-clearing broker). Public.com’s clearing firm is Apex Clearing.

Apex is one of the largest clearing firms in the U.S., and it only works with brokers that follow industry-standard practices. If Public were a scam, Apex Clearing would not maintain a relationship with the broker.

Is Public.com Insured?

Public.com offers SIPC coverage to all its customers. That means all securities held within the account are protected up to $500,000. Of that $500,000 in coverage, half can be applied to cash balances sitting in the account. Public’s Clearing firm also has additional insurance built-in for an added layer of protection.

The broker would not be able to offer that coverage if it didn’t live up to the regulatory mandates of FINRA and SEC.

Is Public.com Secure?

One of the things that regulatory bodies mandate is that brokers establish robust protections for their customers.

At Public, accounts are secured under AES 128-bit encryption. Information transfers such as bank account data and personal information are protected using TLS. In addition to military-grade security, Public.com employs two-factor identification ensuring unauthorized users don’t access accounts they shouldn’t.

Public.com BBB Reviews

Apart from a broker’s licensing and insurance, another place we can look to see if business practices meet expectations is the Better Business Bureau (BBB).

BBB Rating

Public.com is accredited and has an ‘A+’ rating from the BBB.

According to the BBB, rating a business involves looking at several aspects of a company’s business practices. The primary considerations are the number of complaints, the type of business, how long a company has existed, transparency, and licensing.





Public.com Complaints & Reviews

In addition to the BBB rating, we can also gauge customer experience and satisfaction through reviews and complaints registered on BBB’s website.

Customers highlight positives like fast customer service, a responsive app, and a good selection of investment vehicles.

Negative reviews all seem to focus on the same issue. Some customers report problems with frozen accounts and trouble with withdrawals. Interestingly, the company’s feedback states the day trading rules and limitations imposed on accounts. The best way to avoid issues at Public.com is to read the rules before assuming anything.

Investing System

Public offers self-directed accounts. It does not offer financial-planning or investment-advisory services. With a self-managed account, it’s possible to trade the following asset classes:

• Cryptocurrencies
• Treasury and Corporate bonds
• Exchange-traded funds
• Closed-end funds
• Stocks
• Options
• Alternative investments

The alternative-investment service offers trading in shares of collectible items, like Air Jordans, Banksy paintings, digital artwork, and famous video games. Public.com securitizes these physical and intangible assets and then releases the shares on its platform for trading.





There is only two tax structure at Public: the individual taxable account and Traditional/ROTH IRA account.

An individual account at Public can sign up for recurring investments in a basket of assets. Public calls this program an Investment Plan. A plan can invest in a maximum of 20 assets. These can be securities or cryptocurrencies.

Another unique investing service is Alpha. This is an Artificial Intelligence that Public is testing in conjunction with GPT-4. It can perform a variety of functions, such delivering analyst recommendations (but not its own recommendations) on a security and summarizing earnings calls as soon as 2 hours after they finish.

Public.com only opens accounts for U.S. residents who must have U.S. citizenship, permanent residency, or have a valid visa. A Social Security Number is also required.

While the alternative investments generally aren’t covered by SIPC, physical assets are protected by Aspen American Insurance Company. Digital and intangible assets are self-insured.

Cash Management

Aside from brokerage accounts, Public also has cash accounts. These currently earn 3.6%, which is quite appealing. Public’s cash account allows unlimited deposits and withdrawals, so it functions like a checking account (though no checks are provided). Technically, it is a brokerage account with an FDIC sweep, sending funds to partner banks for insurance coverage up to $5 million.

The drawback is that there’s no check-writing or debit card linked to Public’s cash account.

Public.com Cost

Public does not charge commissions for stocks, equity options, and ETF trades made during market hours online. There are no fees or minimum balances. For other trades, fees may apply to non-Premium members (and sometimes Premium users as well).

For example, index options cost 50¢ each for non-Premium customers and 35¢ for Premium members. A stock order placed in pre-market or after-hours costs $2.99 for regular customers. Crypto trades come with either a fixed fee (as high as $6.25) or a 1.25% fee.





Treasury holdings range from 0.29% to 0.09% a year, depending on the Treasury balance.

Buying an investment plan costs from $0.49 to $1.49 per trade, based on the number of symbols it includes. Premium clients pay nothing.

Public’s cash account has no minimum or maintenance fees.

Mobile App

Public clients get to use a user-friendly mobile app that is compatible with both Android and Apple phones and tablets. The software does leave out some features we hoped to see, like mobile check deposit and live streaming of video news. Nevertheless, there are some useful features. Of particular importance is the trade ticket, which is very easy to use. Available trade types include:

- Market
- Limit
- Stop





Asset profiles on the Public app have icons in the top-right corner to add the asset to a watchlist or set up an alert. There is a chart on the profile, although there are no tools of any kind. A graph cannot be rotated horizontally.

Where the app really shines is in its community forum. This is an opportunity for Public users to connect with each other and discuss potential investments and the day’s market news. There’s a Feed icon in the bottom menu for this social network, and each asset’s profile also has a digital bulletin board at the bottom.

Website

Social networking and a watchlist both sync with the website, so it’s really easy to switch between the two platforms. The website also has the same research information the app delivers on specific assets. Surprisingly, charting is just as bad with no tools and no full-screen mode.





The order ticket has the same order types the mobile app provides. On either platform, it’s possible to set up a recurring purchase schedule for an individual asset.





Public does not have any other trading platform, such as a browser-based platform or a desktop program.

Asset Research

Neither the website nor the mobile app has a screener. Nevertheless, it is possible to find something to trade at Public. Market news is available on the app (through the globe icon that appears in the bottom menu) and on the website (through the Explore link that appears in the left-hand column). There are groups of assets here, including:

- Popular crypto
- Top movers
- Earnings this week
- International stocks (Y shares)
- Popular ETFs

It’s easy to scroll through these tiles and see what assets are in them. Clicking or tapping on an entry pulls up the asset’s profile. Both securities and cryptocurrencies have basic trading stats like 24-hour volume and market capitalization.

Securities have the lion’s share of information. Popular stocks have analysts’ trade recommendations with price targets. During our probing, Bank of America had trade recommendations from no less than 28 analysts.

News articles have thumbnails and links to external sites. Examples of providers include Seeking Alpha, Fox News, and Reuters.

Some resources are available only with a Premium membership. These include the three major financial statements (cash flow, income, and balance sheet).

Margin

A brokerage account with Public can operate using cash or margin. Margin brings features like option spreads and leveraged positions, though you can’t short sell.

Borrowing money involves a cost, and margin is no exception. Currently, Public applies 9% to 5% on margin balances. Loans above $1 million may receive individualized rates.

Any cash account at Public can convert to margin on the website or the app through the settings menu.

Customer Service

On the Public website and mobile app, there is a chat widget within the Help Center. The chat tool begins in robo format and has the ability to bring on a human rep if needed. Hours for this personalized service are during the weekday only.

During our testing of the chat service, we found it moderately helpful. Within the chat window, there is also a list of FAQs with answers that many Public customers will find helpful. For issues that can wait, Public has a service email address (support@public.com).

The website does offer a few (only a few) self-help features under the settings & privacy page, which will be found under the account tab that appears in the upper-right corner of the site.

The real downside in this category is the lack of phone service. It is not possible to contact a Public representative over the phone at all. This seems like a terrible idea as some issues will in all probability need phone support at some point.

Bonus Services

DRIP Service: Cash dividends inside a Public account can be automatically converted into additional shares of the securities that paid them.

Initial Public Offerings: Public.com does not offer IPO investing.

Fractional Shares: Generally speaking, trades at Public can be made in either whole shares or whole dollars. Some small issues, like over-the-counter stocks, require a whole-share purchase.

Individual Retirement Accounts: Public offers Traditional and ROTH IRAs.

Extended-hours Trading: Public clients can trade securities during the weekday from 8:00 am, New York time, until 8:00 pm. Cryptocurrencies trade around the clock, 7 days a week.

Periodic Mutual Fund Investing: No mutual funds are available.

Fully-paid Securities Lending Program: Public customers earn 10% of the net proceeds on loaned-out shares. The program is through Apex Clearing Corp, Public’s clearing firm. The income is automatically credited to the account the following month.

Our Recommendations

Beginners: On one hand, Public.com is designed for novices. It has a large library of educational materials that are written for newbies. On the other hand, the company has no managed accounts, and these would be better for beginning investors. We recommend a hybrid robo-human advisory account with a firm like Webull.

Active Stock Trading: Although Public does have some good trading resources, like OTC stocks and fractional-share trading, it just doesn’t have the software to create a pro-level experience. We suggest Charles Schwab instead.

Mutual Funds: Although Public doesn’t have any mutual funds, Charles Schwab has thousands of them.

Retirement Planning & Long-Term Investing: Public is not designed for retirement saving. Robinhood, by comparison, has lots of long-term planning resources, including a 1% free contribution match.

Small Accounts: Because of Public’s inactivity and other fees, we can’t defend it for small investors. Webull would be a better pick.

Public Brokerage Review Summary

With the sole exception of alternative investments, Public.com just doesn’t have anything to make it stand out from the crowd. In fact, it often fails just to be average.

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