Stock Values

Yesterday, I called Fidelity Investments with what I thought was going to be a simple request: to sell a bond from my taxable portfolio and concurrently buy it back into my IRA account. You would think that such a transaction would be a nobrainer for the mighty giant that Fidelity is. The answer I got was simply mind boggling. SEC in their infinite wisdom has recently made the practice of directed trading illegal and Fidelity's compliance department has determined that this means that Fidelity is not allowed to facilitate a transaction, where I would essentially sell a bond to myself, without putting it on the open market.

Putting this thinly traded bond on the open market means that in addition to paying round trip commissions, which kind of makes sense, I would have to give Fidelity the juicy spread between their market maker's buy and sell price, which makes no sense whatsoever. That their market maker for this bond happens to be another subsidiary of the same Fidelity matters not! Fidelity customer service manager, who I spoke to insisted that since the transaction must go through this other subsidiary, that subsidiary has to collect their prevailing spread, because they will not work for free. He also claimed that other "reputable" brokerages operate the same way.

Funny how this well thought out SEC rule following certain abuses by brokerages, which padded their pocketbooks at the expense of small traders and which rule was intended to put the small folk on par with the big guys, actually gave Fidelity an excuse to make more money on people like me. Of course, if one of the movers and shakers with orders in the billions came to Fidelity with the same request, I am sure, that 50 point spread would quickly melt away.

My next step is to take this issue up with the President of Fidelity Brokerage Services LLC subsidiary of Fidelity Investments, James C. Burton. It's not about the $50, but I feel the need to further investigate this issue and hear an explanation coming from this horse's mouth. Fortunately, Jim is my third degree contact on Linked In, with a whopping 16 of my direct contacts in the path. Could one of you dear people, or anyone else for that matter, help me bypass the gatekeepers and speak to the man directly, I would much appreciate it!