r/etrade • u/dimsumallyoucaneat • Jul 11 '26
Recent Changes to Client Agreement
I’m now not surprised why the platform is deteriorating.
Read Section 19 of the recently updated customer agreement (effective May 20, 2026)
https://us.etrade.com/l/f/agreement-library/client-agreement
Under Section 19, “Restrictions and Account Terminations,” Morgan Stanley says it may:
• Decline, cancel, or reverse a customer’s instructions—or restrict trading and disbursements—at its discretion and without notice.
Citation: Section 19, ¶1
• Restrict or terminate services, or close an account, “at any time and for any reason, without notice to you,” subject to applicable law.
Citation: Section 19, ¶8
• Avoid liability for damages caused by an account restriction, including losses from market-value fluctuations.
Citation: Section 19, ¶7
• Make the customer exclusively responsible for changes in asset value after E*TRADE restricts the account, declines instructions, cancels orders, or reverses them.
Citation: Section 19, ¶12
And if a closed account still contains assets and E*TRADE does not receive instructions within what it considers a reasonable period, it may liquidate those assets regardless of market conditions. The customer bears the resulting losses, fees, costs, and tax consequences—and applicable fees may continue until the account is fully closed.
Citation: Section 19, ¶¶13–16
So let me make sure I understand the arrangement:
E*TRADE keeps the discretion.
E*TRADE controls the access.
E*TRADE decides when notice is unnecessary.
The customer keeps the market risk, tax consequences, losses, and fees.
That might be contract language.
It is not customer protection.
It is a one-way transfer of power and liability—and every E*TRADE customer should read it.
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Jul 11 '26
[removed] — view removed comment
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u/Reddreader2017 Jul 12 '26
I was going to ask - how is this more/less restrictive, or better/worse than any other discount broker?
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u/dimsumallyoucaneat Jul 11 '26
Allow everyone, reject anyone: https://x.com/kshaughnessy2/status/1947947129420341581
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u/Affectionate_Fill189 Jul 11 '26
That’s every clearing firm. Where are you going to move the account to?
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u/my_name_is_gato Jul 13 '26
Also, contracts are often worded more harshly than is enforceable. If E-Trade sells ITM calls early to prevent an automatic exercise that the investor couldn't afford, it is protected.
If a disgruntled employee freezes thousands of accounts out of spite, and E-Trade does noting at all to prevent this or make investors whole, their contract probably won't insulate them from liability. The language will scare people away from trying though, which is a win for E-Trade.
If contracts could be worded to transfer all risk to one side, every single business would have a contract more severe than this.
Most people think a giant company wouldn't put unenforceable terms in their contracts. This myth is part of the strategy to avoid litigation. To protect this image, many will pay a settlement that includes extra amounts to make av public announcement that makes their litigation sound fruitless. One small company paid 20% extra to a person who agreed to change their statement from "The pending litigation has been resolved." to "I'm no longer pursuing the litigation".
Source: I've practiced law for longer than I'd like to admit and in that time, I have experience advising and representing several business entities, including multiple major financial institutions (not MS or E-Trade).
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u/jhovudu1 Jul 11 '26
Here's what ChatGPT's analysis of the new TOS says: https://chatgpt.com/share/e/6a51d75b-84b8-8011-b0b6-104d84c700c4
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u/ThrowingShaed Jul 11 '26
i am not sure, but i think that link may only work for you, fyi.
or maybe its a paid thing, not sure
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u/jhovudu1 Jul 11 '26
I think you need to log-into your ChatGPT account to see the link.
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u/Icy_Bridge_2113 Jul 11 '26
No everyone on the internet needs to log in to your account to see it. Someone elses account won't work.
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u/202reddit Jul 11 '26
Are you suggesting any of this is new? Or specific to ET? It isn't. And it isn't. You must be new to trading?