Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Fidelity Accidentally Liquidated my 401K
Old 08-09-2022, 05:54 PM   #1
Recycles dryer sheets
 
Join Date: Jul 2020
Posts: 263
Fidelity Accidentally Liquidated my 401K

They admitted fault, and at the time told me it might take a week or two to restore and they would make good on any gains I would have made in the interim, and would protect me from any losses as well, so that sounded good to me, (although they would never tell me in any detail what that meant even though I later asked). To keep it simple let's say the value liquidated was 500K.

Fast forward 2 weeks and they had pulled the 500K cash back from the IRS and from my bank where they sent it and used it to restore the exact number of shares that they liquidated, and here's where it gets interesting. In the interim the market had (not surprisingly) gone down, so value of the shares they bought were less than what they liquidated, let's lay 490K. As well, the very next day the market went down again, let's say another 5K.

Now, keep in mind that the first value that I can actually trade my shares at is the value of the shares (all mutual funds) the day after they re-bought the shares.

My expectation would be that they then need add to my account the difference in its value when they liquidated it (500K), and it's value the first day I could actually manage it again (485K), i.e. 15K. Again, the value of the account the day they bought the shares back was no different to me than any day during the previous two weeks when I had no control over my account due to their error.

Right now they are claiming they only need to add back the 10K the shares had lost between liquidation day and they day they bought them back. Again, that value means nothing to me because I couldn't have turned around and traded them, and I think the risk on that day belongs to Fidelity, not me.

What say you board?
cat4ever is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-09-2022, 06:18 PM   #2
Recycles dryer sheets
 
Join Date: Sep 2016
Location: Rain City
Posts: 65
Do you make it a habit of trading your holdings in your 401K or did you have real plans to trade during the two weeks you were out of the market? It seems to me the $10k they paid is more than adequate.
obsessed is online now   Reply With Quote
Old 08-09-2022, 06:33 PM   #3
Recycles dryer sheets
 
Join Date: Jul 2020
Posts: 263
Keep in mind that the 10K they "paid" was what they had left over after getting my funds back and buying the cheaper shares. And yes, possibly I would have traded some of them, the market had been tanking and had an up day they day they bought. We will never know now.
cat4ever is offline   Reply With Quote
Old 08-09-2022, 06:35 PM   #4
Recycles dryer sheets
 
Join Date: Aug 2018
Posts: 338
I wonder if Vanguard had done this just what the response would be.
Graybeard is offline   Reply With Quote
Old 08-09-2022, 06:36 PM   #5
Dryer sheet aficionado
 
Join Date: Dec 2021
Posts: 36
Agreed with obsessed ^^ ... Yes, they made an error. As long as they restore it to what it was had there been no error, you've been made whole. Just because you lost an additional 1-2 days worth of the option to make trades doesn't mean that they owe you for the inter-day movement of your restored funds until those funds settled & you had access to manipulate them. The error is annoying. They aren't obligated to recompense you for annoyance.

They've made you whole. Accept it & move on. We're mostly all long-term investors... do you want to waste hours and hours of your time, plus days/weeks of frustration & fighting for what amounts to 1% of your assets? 20+ years from now, will that $5k mean the difference between a comfortable retirement & living on dog food? Move on, friend.
Kork13 is offline   Reply With Quote
Old 08-09-2022, 06:46 PM   #6
Recycles dryer sheets
 
Join Date: Jul 2020
Posts: 263
Also, it took them 4 days to acknowledge the error, as well as a LOT of time on the phone with their support team who were telling me there was nothing they could do. These were not pleasant days. Not to imply i want vengeance, but I think I should get the benefit of the doubt in such matters as you mention above.

I guess I see it as someone hit my car, got it fixed and had a fender bender on the way to delivering it to me. They can't very well say, well we had it fixed yesterday so we're good. It's up to them to make sure it's whole at the point of handing over the keys.
cat4ever is offline   Reply With Quote
Old 08-09-2022, 06:49 PM   #7
Recycles dryer sheets
 
Join Date: May 2011
Posts: 407
If the market went up that day, would you have notified Fidelity that they should keep those profits since you weren't able to trade?

If the answer is yes , then continue to pursue your claim with them.

If no, then move on.
11522914 is offline   Reply With Quote
Old 08-09-2022, 06:49 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Aug 2007
Posts: 2,303
Wow. I'd be curious to know how they can accidentally liquidate any account?

I'm glad that they admitted their mistake and made you whole. And I agree with the other posters, that what they offered was reasonable. Maybe they should have offered something for the inconvenience? But personally, I'd be happy that everything was back without too much hassle.
__________________
Eat, Drink and Be Merry.
tulak is online now   Reply With Quote
Old 08-09-2022, 06:55 PM   #9
Thinks s/he gets paid by the post
 
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,355
I wonder how different it would be if Fidelity had just locked out his account so no trades could have been done. Would they owe OP anything at all? I think that Fido was more than generous in getting the full 500K value even though the stock went down. I would have thought they only would have owed was to make the same investment holdings.

Where would it end? If Fido gave you the extra 5K and you wouldn't be able to trade it for another day and the market went down 10% over that period would you expect another 500? And then what about the next day?
CRLLS is offline   Reply With Quote
Old 08-09-2022, 06:55 PM   #10
Recycles dryer sheets
 
Join Date: Jul 2020
Posts: 263
Quote:
Originally Posted by 11522914 View Post
If the market went up that day, would you have argued with Fidelity that they should keep those profits since you weren't able to trade?

If the answer is yes , then continue to pursue your claim with them.

If no, then move on.
I kept those scenarios out to simplify, but again I get the benefit of the doubt either way. As well, they should have to at least use all the money they pulled back to buy shares in my account, i.e. they shouldn't be making a profit on their error with they money they liquidated from me, which is what you're suggesting.
cat4ever is offline   Reply With Quote
Old 08-09-2022, 06:57 PM   #11
Recycles dryer sheets
 
Join Date: Jul 2020
Posts: 263
Quote:
Originally Posted by CRLLS View Post
I think that Fido was more than generous in getting the full 500K value even though the stock went down.
Generous? It didn't cost them anything, they merely used the money they pulled back from my bank and the IRS to buy both the initial and the extra shares.

"I would have thought they only would have owed was to make the same investment holdings. "

So they just keep the extra since the shares cost less to buy back on their initial buy?
cat4ever is offline   Reply With Quote
Old 08-09-2022, 07:02 PM   #12
Recycles dryer sheets
 
Join Date: Jul 2020
Posts: 263
Quote:
Originally Posted by tulak View Post
Wow. I'd be curious to know how they can accidentally liquidate any account?
Software glitch, had to do with mega corp moving management of our 401K from in house to Fidelity.
cat4ever is offline   Reply With Quote
Old 08-09-2022, 07:11 PM   #13
Recycles dryer sheets
 
Join Date: May 2011
Posts: 407
Quote:
Originally Posted by cat4ever View Post
I kept those scenarios out to simplify, but again I get the benefit of the doubt either way. As well, they should have to at least use all the money they pulled back to buy shares in my account, i.e. they shouldn't be making a profit on their error with they money they liquidated from me, which is what you're suggesting.
Unless I'm missing something here's my thought process.

You were made whole as of the morning of that day but you weren't able to trade anything until the next day.

Had the market gone up , great, you're made whole and made a profit even though you couldn't trade that day.

Per the claim you're making, if the market went up then Fidelity should keep that money (good luck trying to figure out that adjustment) as you were made whole. As long as you would have done that then pursue your claim.

If not, sounds like heads I win, tails you lose.

Again, I may be misunderstanding something.
11522914 is offline   Reply With Quote
Old 08-09-2022, 07:17 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 8,411
Accidently liquidating a retirement account?

This should never happen, and there are safeguards to make sure it never happens.

Like a follow-up phone call a day or 2 after for confirmation? I get this every year.

Dunno. This should never happen.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is online now   Reply With Quote
Old 08-09-2022, 07:17 PM   #15
Full time employment: Posting here.
 
Join Date: Aug 2017
Posts: 823
It sounds like you are just angry at them and want revenge.

When someone crashes into my car insurance fixes it. They don't account for all the inconvenience it caused me to have to go get a rental and wait and so on.
badatmath is online now   Reply With Quote
Old 08-09-2022, 07:19 PM   #16
Recycles dryer sheets
 
Join Date: May 2011
Posts: 407
Quote:
Originally Posted by 11522914 View Post
Unless I'm missing something here's my thought process.

You were made whole as of the morning of that day but you weren't able to trade anything until the next day.

Had the market gone up , great, you're made whole and made a profit even though you couldn't trade that day.

Per the claim you're making, if the market went up then Fidelity should keep that money (good luck trying to figure out that adjustment) as you were made whole. As long as you would have done that then pursue your claim.

If not, sounds like heads I win, tails you lose.

Again, I may be misunderstanding something.
My misunderstanding.

I agree with you. You should have been made whole up to the previous evening close and then should have been able to trade the next morning.

Since they didn't allow you the opportunity to trade that day or couldn't because they are mutual funds and you can only get the closing price that day, they are responsible for any losses.

You should continue with your claim.
11522914 is offline   Reply With Quote
Old 08-09-2022, 07:46 PM   #17
Recycles dryer sheets
 
Join Date: Jul 2020
Posts: 263
These are the three tenets I think are fair, and cover all the scenarios brought up, as to what they should be on the hook for:

1. They must at least use all the money they retrieved to buy shares back into my restored 401K.

2. My account should at least have the same number of shares of each fund that it had on the day it was liquidated.

3. On the first day that I am in control of my shares and can trade again, the value of my account should, in effect, be made to be at least the same as the value it was the day it was liquidated.

Remember, this is their error, not mine.
cat4ever is offline   Reply With Quote
Old 08-09-2022, 07:57 PM   #18
Recycles dryer sheets
 
Join Date: May 2011
Posts: 407
Quote:
Originally Posted by cat4ever View Post
These are the three tenets I think are fair, and cover all the scenarios brought up, as to what they should be on the hook for:



1. They must at least use all the money they retrieved to buy shares back into my restored 401K.



2. My account should at least have the same number of shares of each fund that it had on the day it was liquidated.



3. On the first day that I am in control of my shares and can trade again, the value of my account should, in effect, be made to be at least the same as the value it was the day it was liquidated.



Remember, this is their error, not mine.
I agree.
11522914 is offline   Reply With Quote
Old 08-09-2022, 07:57 PM   #19
Recycles dryer sheets
 
Join Date: Jul 2020
Posts: 263
Quote:
Originally Posted by RobbieB View Post
Dunno. This should never happen.
Rest assured it did, and I can give you the deets...

Back when my account was managed by mega corp, I had for a time set it up to make monthly withdrawals from my account for a set amount into my regular bank account. I eventually turned this off.

Then In 2022, mega-corp moved all our accounts to Fidelity, and they were apparently moving parts of the databases over to Fidelity in a piecemeal fashion for the first several months of 2022. The old withdrawal command i had setup was still sitting in the old database, and that command got brought over to Fidelity at some point, but without the set amount attached to it, and with out the command that it had been turned off. So, software being software, saw the withdraw command with no amount, and apparently the default for a withdraw command is withdraw it all, and the next morning I got an email that my withdrawal was successful and I went into panic mode.
cat4ever is offline   Reply With Quote
Old 08-09-2022, 07:59 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 8,411
I believe you. But this should still never happen. Dangers of computer run programs eh?
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
So I guess I accidentally fired my FA yesterday.... FIREmenow FIRE and Money 165 01-25-2015 07:10 PM
I Accidentally marked a Forum as Ignore MikeD Forum Admin 2 05-11-2012 10:44 AM
I accidentally contributed too much to my IRA's this year...what to do? thefed FIRE and Money 3 08-26-2008 10:22 PM
Accidentally watched a Kiyosaki video today NinjaPigeon FIRE and Money 31 03-07-2007 03:50 PM

» Quick Links

 
All times are GMT -6. The time now is 12:49 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.