Friday, December 24, 2010

Fidelity Brokerage Extends Denial of Trading Opportunities to Synthetic Floaters and Even an Exchange Traded Junior Bond DFP

I received the redemption proceeds of DFY on Thursday.  I owned 210 shares of this senior bond in retirement accounts.  For reasons that are not capable of being understood, Fidelity is currently preventing its customers from buying DFP, another exchange traded bond issued by Delphi Financial that I no longer own. Bought 100 DFP at $17.1   Bought 50 DFP at $17.10  Sold 50 of 150 DFP at 21.7 Added 50 DFP at 19.75  Sold: 50 DFP @ 23.10 and @ 23.17 There is simply no rational justification for that prohibition.  I will just assume that someone who has no idea about investing made the decision at Fidelity.  I was thinking of buying back DFP to replace DFY.

I then discovered that Fidelity was no longer accepting orders on synthetic floaters, thereby becoming the only brokerage company to my knowledge who is denying their customers access to those securities.  For those who read this blog, the synthetic floaters have been particularly beneficial to advancing my capital base in the retirement accounts.  I find this latest action by Fidelity to be inexcusable.  I did check all of the synthetic floaters mentioned in my gateway post for this security: Synthetic Floaters.  Fidelity Brokerage now prohibits buy orders for all of those securities.  I have not yet checked to determine how many other exchange traded bonds are now off limits to Fidelity customers.  I do expect Fidelity to extend its denial of trading opportunities to other exchange traded bonds as time progresses, and they are not responsive to customer complaints on this issue, except to say that the complaint has been sent to "upper management".  I previously noted many months ago that Fidelity had prohibited the purchase of exchange traded "principal protected" senior notes whose interest payments were tied to the performance of an index.  Fidelity Prohibits New Purchases of SIPs

I can confirm that JBK, which is currently a fixed coupon trust certificate containing a junior GS TP, is no longer available for purchase by Fidelity customers.  I made a fair amount of money trading that one.    Bought 100 JBK at $16.15 Bought 50 of the TC JBK at $16  Sold 100 JBK at 21.59 Sold 50 JBK @ 21.59  This is just an outrage!

I have recently expanded my brokers to include Vanguard and Schwab.    The latest action by Fidelity, which denies my access to securities that I view as important to managing my retirement accounts, will require the  removal of my Roth IRA from that firm.

I really believe it is a waste of time to complain to Fidelity.  However, if you have a brokerage account at Fidelity and wish to at least have the option of buying exchange traded bonds at that firm, I would suggest sending them an email recognizing of course that is a waste of your time.  

Since Fidelity is denying me the opportunity to manage my Roth IRA in a manner deemed appropriate, I have already completed a transfer application for that account.  I also did another Roth Conversion this morning, further diminishing the importance of the regular IRA at Fidelity.  So I will just leave that account there until I reach 70 and then distribute it to a taxable account.

If Fidelity continues to extend its denial of trading opportunities to include more Trust Certificates and other exchange traded bonds, then my much larger taxable account will be moved to a brokerage company more responsive to their customer needs.  I have already started to move funds out of that one in response to the Fidelity policy on SIPs.

This is the message that I received when I attempted to buy GJS today in my Roth IRA:

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