Fidelity's "risk assessment" team has locked my account. I've already arranged transfer to another brokerage....
... but as I try to understand WTF happened I've discovered there are many others with even more egregious violations.
Big Brother (Fidelity) is watching, best example:
r/fidelityinvestments icon Go to fidelityinvestments r/fidelityinvestments • 8 mo. ago Vestor-8
Long tale of accounts restrictions woe Official Response I have posted with some frequency on this sub, but because of the personal financial information this post reveals I think it prudent to post this with a new Reddit account.
Background: I've had a Fidelity brokerage account for about 12 years; recently I opened a CMA and transferred in an HSA. The accounts are in the Private Client Group tier which has the practical effect that each of the calls to Customer Service ("CS") mentioned below was promptly answered after I persuaded the robot to ring through. This post was made on Weds. Aug. 9, 2023.
I requested an international bank wire transfer to an individual in a foreign country, hereinafter "FC". After Fidelity's due diligence discussion with me, the transfer was declined. I believe that Fidelity -- in good faith but mistakenly -- suspected I was at risk of being defrauded. In retrospect my explanation of the business reason for sending the wire was in some respects incomplete and in at least one respect inaccurate. Why? Because the transfer was part of a series related to a construction project of my wife's that I am financing; and many of the details I conveyed in the phone call with Fidelity's international wire personnel were based on my incomplete memories of conversations with my wife. The intended recipient of the wire was my wife's uncle who is serving as overall on-site manager of the project in FC. My wife has been close to him since she was a child. She was born and raised in FC and immigrated to the U.S. as an adult about 10 years ago. She and I have lived together for almost three years and were married earlier this year. She speaks regularly on the phone with her uncle. In short, knowing what I know, the idea that she and her uncle are defrauding me is preposterous.
After Fidelity declined to send the wire, on the same day I initiated an EFT transfer to a bank account that has been linked to my Fidelity account(s) for about a decade. The amount of the transfer was the same as the amount I had requested for the wire.
I'll call the day I requested the wire "Day 0." I will refer to subsequent days relative to that day. (Today is Day 15; I just think relative days will be easier to understand than dates.) In each of my calls to CS, some of which I mention below, I was put on hold for 5-10 minutes while the CS rep talked to "the back office" seeking information for me. As I found out, the risk/security team does not speak to clients.
On Day 1 I received two emails from Fidelity, one each for my CMA and brokerage accounts, announcing that my "Bill Pay account is cancelled." Since I wasn’t using Bill Pay, I was puzzled by these emails but shrugged them off. Later on Day 1 I received an email from the processor of my HOA dues autopays: "Your payment was returned." Obtusely I figured it was a glitch somewhere, and logged into the HOA processor site to re-fetch the payment from my Fidelity CMA "manually."
On Day 1 I went to a branch of my bank and sent the international wire without issue.
On Day 2 I discovered that my electric & gas utility autopay had been "returned" (rejected). I called Fidelity. I thus first learned that my accounts (CMA, brokerage, and HSA) were all under restrictions that prohibited any withdrawals (including transfers among my Fidelity accounts) or initiation or enlargement of existing positions (securities purchases). Selling is OK. The only clue I was given was that a "large disbursement" was being reviewed. The only candidate disbursement was my EFT to my bank account on Day 0. This disbursement was large relative to my day-to-day cash transfers but not relative either to the total assets in my accounts nor to previous transfers over the years to the same bank account. This mention of a "large disbursement" on Day 2 is the *only* "explanation" that I have been given to date for the restrictions
On Day 3 I received two emails, one each for the HOA dues payment and the utility payment, announcing a "Direct Debit Failue Notification" ... "because the account does not have sufficient funds to cover the debit." The explanation was false in both cases, as there were $thousands in the CMA account beyond the debit amounts. The same day I received an email from the HOA payment processor that "Your payment was returned" – the "manual" payment I had intitiated on Day 1.
Either late (EDT) on Day 2 or early on Day 3 a CS rep told me that someone would "reach out to me". When I inquired when that might happen, I was told "usually within 24 to 48 hours."
On Day 7, in response to my lament to a CS rep that it was logistically difficult for me to pay my obligations, I received a Fidelity secure message about how I could pay bills. The required procedure is demeaning and arduous. Instead of following that procedure, I sold some securities from my IRA at another firm and transferred the cash – a taxable withdrawal -- to a bank account. I also switched autopays at third parties from my Fidelity CMA to that bank account.
On Day 7 I sent a secure message saying, "If possible please convey to the Risk (Security/Fraud) team that I am confident that I can, in a conversation of no more than 10 minutes, provide new facts showing that reasonable suspicion of fraud is in fact not justified." On Day 8 I received a reply saying "You will receive our response to your concern(s) once our research is completed" and advising that I call if I need assistance with a time-sensitive transaction and that I could send another secure message with "additional inquiries, information, or material regarding this issue."
On Day 7, a Tuesday, a CS rep again told me that someone would reach out to me; in answer to my "when" question, she said it "should be by the end of this week", i.e., Day 10.
On Day 11 the USPS delivered a letter postmarked on Day 6 saying, "recent activity in your account(s) is currently under review" and describing the restrictions.
On Day 13, despairing of having no information whatsoever as to how long Fidelity's "review" would take, at another firm I requested an ACAT transfer from Fidelity of my entire brokerage account. Early today, Day 15, I requested an ACAT transfer of my CMA account. Later the firm through which I had requested both transfers told me that Fidelity had rejected the brokerage transfer because of their account restrictions. This appears to me to be a violation of FINRA's ACATS rule, Rule 11870, specifically its section (d)(3) that enumerates the only twelve allowable reasons for the carrying (source) firm refusing an ACAT request. Account restrictions are not among them. If you're so inclined: FINRA Rule 11870. I am a member of a state bar association, but have no education nor experience in securities law.
Today, Day 15, I sent a three-part secure message to Fidelity containing an expanded and corrected description of the reason I requested the international bank wire on Day 0. --Three parts because of secure message length restrictions.
In sum, my accounts have been restricted for two weeks with no information about anything I can do to have the restrictions lifted and no indication of how long the restrictions may last. No one has "reached out" to me despite my being told twice that would happen. I think that restricting withdrawals from my HSA is a nice touch; fortunately I don't expect any medical bills until next month.
(For reference: all of Fidelity's customer account agreements contain, "Fidelity reserves the right to restrict your account from withdrawals and/or trades if there is a reasonable suspicion of fraud, diminished capacity, or inappropriate activity.")
This "research" or "review" or "investigation" has been going on for two weeks. Has Fidelity hired detectives in FC to investigate the background and probity of my wife's uncle? Is Fidelity's risk/security team understaffed? If you were me, what would you do, and when, if there's no change in the situation?
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