I called TDA Friday evening. They had restricted my account but removed the flag. I overnighted them a check this morning to bring my account to comfortably over the $25k limit. I have no idea what the reasoning would be for a rule like that.
Whether you agree with it or not, the the SEC thinks day trading is risky and the therefore requires minimum account size to back up that risk. Since small accounts tend to be less sophisticated, big brother is protecting you from yourself as well as brokers from you. The nice thing is that in return, you get 25% intraday margin and you can really leverage yourself short term if you know what you're doing.
FINRA 04/01/2010 WITHOUT ADMITTING OR DENYING THE FINDINGS. THE FIRM CONSENTED TO THE ENTRY OF FINDINGS AS SUMMARIZED AS FOLLOWS: DURING THE PERIOD OF FEBRUARY 2006 THROUGH OCTOBER 2007 (FIRM NAME HERE) VIOLATED PATTERN DAY TRADING MARGIN RULES BY ALLOWING MARGIN -ACCOUNT CUSTOMERS WHO HAD BEEN DESIGNATED AS "PATTER DAY TRADERS" - THAT IS. EXECUTING FOUR OR MORE DAY TRADES WITHIN. FIVE BUSINESS DAYS - TO DAY TRADE AFTER THEIR ACCOUNTS FELL BELOW $25,000 IN EQUITY, WHICH VIOLATED NASD CONDUCT RULES 2520(F)(8) AND 2110; AND DURING THE PERIOD OF FEBRUARY 2006 THROHG JANUARY 2007, THE FIRM FAILED TO TIMELY OBTAIN FROM ITS CUSTOMERS SUFFICIENT CASH PAYMENT, OR FROM ITS PRIMARY REGULATOR AN EXTENSION OF TIME WITHIN WHICH TO RECEIVE A SUFFICIENT CASH PAYMENT TO FULLY FUND A SECURITIES PURCHASE 0N 65 SEPARATE OCCASIONS, AND DID NOT THEN PROMPTLY CANCEL OR LIQUIDATE THE TRANSACTION WITHIN THE PERIOD SPECIFIED BY FEDERAL RESERVE REGULATION T, WHICH CONDUCT VIOLATED SECTION 7 OF THE SECURITIES EXCHANGE ACT OF 1934, SECTION 220.8 OF REGULATIO T, AND NASD CONDUCT RULE 2110. Sanctions Ordered "Censure and Monetary Fine of $200,000
There is no way around that rule. The brokers don't like it either, slows down their commissions. It was previously mentioned that if you are approved for futures trading - this rule doesn't apply to futures. Futures are under a different reg.