Selling your art for money? That’s fine. Putting that money in your brokerage account? Also fine. But turning your brokerage account into art—that's apparently over the line.
That’s the message that artist Sarah Meyohas received earlier this month in the form of a letter from Charles Schwab, her long-time brokerage.
“During a recent review of the account referenced above,” the letter said, “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.”
The letter was unexpected, to say the least. Meyohas had had nothing but cordial relations with Schwab over the years, and they’d given her no reason to believe that anything was remiss. Yet when she called them, they wouldn’t even tell her why they were closing the account, and, effectively, firing her as a client.
Schwab, of course, was entirely within its rights to fire Meyohas for any or no reason: that’s what she agreed to under the terms of the agreement she signed when she opened the account. But Charles Schwab didn’t become a multi-trillion-dollar brokerage by forcing its clients to liquidate their accounts and move them elsewhere. So, what’s going on?
The answer is almost certainly related to the art exhibit that Meyohas showed at 303 Gallery in New York in January. The show involved trading stocks and making paintings of the resulting share prices:
Tuesdays to Fridays, 1-4pm, Meyohas will trade stocks on the New York Stock Exchange during regular market hours. She will place her trades directly from 303 Gallery. Once she affects a stock's valuation, Meyohas will announce the change in market capitalization and record the shift with oil stick. Marks will accumulate in a gestural record of the stock’s performance. The line, value over time, is an index of her movement, physically in the gallery and virtually in her ownership.
Most of the paintings in the show – all but one, in fact – were the result of trades made from a TD Ameritrade account that Meyohas set up specifically to fund the artwork. The very first painting, however, Paradise INC on January 12, 2016, was made just before the TD Ameritrade account was up and running, and so Meyohas made the trades out of her Schwab account.
All of the stocks that Meyohas traded were small, illiquid securities. Often they were banks; sometimes they just had evocative names like Pope Resources or Neuromama. Paradise INC, a company worth just $11 million, had closed at $24.35 the day before; Meyohas bought shares as high as $29, sold shares as low as $22.05, and ended up losing money on the stock while making this painting.
That one artwork, which Meyohas kept for herself, seems to have been the sole reason why Schwab canceled her account.
A Schwab spokesman refused to comment about Meyohas, or even answer general questions about what Schwab’s “business guidelines” might be, how brokerage clients can know when they might be violating them, or whether it’s a bad idea to use a Schwab account in the execution of an art project. But it’s possible that someone at Schwab was reading Matt Levine, who mentioned Meyohas in his daily email, and wrote in his inimitable deadpan:
Would you call that market manipulation? It's a trick question, nobody knows what market manipulation is, but trading a stock with no purpose other than to move its price does seem a bit suspect. On the other hand, her goal was not to make money but just to "delineate intention." I don't know. Anyway her show opens tonight, and you should go see it, especially if you work for the Securities and Exchange Commission.
The Meyohas story has a happy ending: TD Ameritrade, where she did all the rest of the trades in her show, was more than happy to be her new brokerage. Indeed, a broker there loved her project and said that it was “an honor” to have her as a client. But even TD Ameritrade refused to answer my questions about art projects, whether the brokerage has "business guidelines", and the like.
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 in to 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.
Still, if they’re going to fire Meyohas as a client and not even tell her why, you’d think the least Charles Schwab could do to make it up to her would be to buy one of her paintings.