Online Broker Freetradez Still a Start-Up Waiting to Happen

Would-be online broker Freetradez.com Inc. plans to book more than $1 billion in revenue next year. But so far, it hasn’t received regulatory approval to trade a single share.

The Grand Blanc, Mich., start-up, which says it will offer zero-commission trades and promises “a new standard in the financial services industry,” is still in the starting gate more than a week after its scheduled launch.

“We haven’t taken any [orders] yet because we’re just waiting for the final approval from the NASD [National Assn. of Securities Dealers],” said Jasen Watkins, the 27-year-old chief executive of Freetradez.

Watkins is a former Gruntal & Co. broker who was fired in 1993 for trading options for customer accounts without authorization. Since then Watkins has held a wide array of jobs, ranging from work in a candle store in Michigan to a mortgage finance firm in Miami.

Freetradez recently bought a firm, Bottom Line Financial Group, that Watkins said should guarantee regulatory approval to trade shares.

But for now, “they are not an approved company,” said NASD spokeswoman Nancy Condon. Condon would not comment specifically on whether Watkins’ termination from Gruntal has any bearing on the broker/dealer application filed by Freetradez, but said, “We look at everything.”

NASD rules stipulate that its regulators may consider “whether an associated person was terminated for cause,” which could bode ill for Freetradez’s approval.

Freetradez.com, which promises to offer investors free market and limit orders, mutual funds and ultra-fast stock quotes normally reserved for professional traders, will generate revenue by selling ad space on its Web site, Watkins said.

Just two companies have committed to ads so far, Watkins said.

He also intends to have 4,000 people in call centers to provide round-the-clock customer service.

Many online brokerages add to their revenue by reselling customer stock orders to third-party market makers. But Freetradez insists it will never sell its orders.

Freetradez, which has attracted financing from computer firms Verio Inc. and F5 Networks Inc., plans to spend $50 million on advertising over the next nine months, Watkins said. “Capital has been the least of any of the problems so far,” he said.