Why Charles Schwab Refuses To Do Business With This Artist
Apparently, Charles Schwab (SCHW) doesn’t want you to turn your stock trades into performance art.
That’s the conclusion one can draw from the news that the stock brokerage refused to do business with artist Sarah Meyohas, who has been trading stocks not to make money, but to facilitate her visual art.
According to a post on the artist’s website, she made trades “with the purpose of visual change.” She bought and sold thinly traded penny stocks with the purpose of moving their prices. “Once I have moved a stock price, I will redraw it on canvas with oil stick,” she writes.
But according to a post on Fusion, her brokerage, Charles Schwab, didn’t take kindly to this sort of trading. According to the report, Meyohas recently received a letter stating, “During a recent review of the account referenced above we determined that it no longer meets Schwab’s business guidelines for accepting and/or maintaining accounts. Schwab is now exercising its right to close your Schwab account.”
While Schwab wouldn’t comment on why it refused Meyohas business, Fusion author and finance maven Felix Salmon speculated that it was because such trading could be considered market manipulation. He writes:
I did eventually find one brokerage employee who would talk to me about such policies anonymously. He said that the language in Schwab’s letter about “business guidelines” can probably be translated to mean that they think that Meyohas was guilty of illegal market manipulation.
That’s pretty ludicrous, on its face – after all, there was a clear artistic purpose in trading the stock, and Meyohas knew full well, going into the project, that her brokerage account was going to end up losing money. Besides, it’s not exactly news that small-cap stocks move when you trade them. But as is generally the case when dealing with a huge, faceless financial institution, there’s little point trying to argue the merits of any given dispute. Schwab made its decision, and Meyohas had to move all her assets out of the company by the end of the month, end of story.
Of course, one can’t exactly blame Schwab for covering its bases by dropping Meyohas’ business. Surely it wasn’t the kind of profit-driving account that would make any difference to the company’s bottom line, and it’s better to be safe than sorry.