Fidelity Accidentally Liquidated my 401K

[cat4ever]

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?

 

[obsessed]

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.

 

[cat4ever]

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.

 

[Graybeard]

I wonder if Vanguard had done this just what the response would be.

 

[Kork13]

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.

 

[cat4ever]

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.

 

[11522914]

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.

 

[tulak]

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.

 

[CRLLS]

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?

 

[cat4ever]

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]

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]

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.

 

[11522914]

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.

 

[RobbieB]

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.

 

[badatmath]

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.

 

[11522914]

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.

 

[cat4ever]

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.

 

[11522914]

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.

 

[cat4ever]

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.

 

[RobbieB]

I believe you. But this should still never happen. Dangers of computer run programs eh?

 

[jazz4cash]

It seems like most of responses are missing the point. If I were in that situation, I would expect Fido to give me benefit of the doubt.....if it was a huge amount maybe they make some other concession but the $5k seems reasonable to fix an error that was 100% caused by them for a new client. I'd make some noise at mega-corp and the fact that they did not immediately take ownership is extremely disapointing.

 

[Jerry1]

I think you are correct that the cut off is when you have control over your account. However, I think you should be honest with yourself - we're you really going to do a trade? If not, I think Fidelity has handled this fairly. If you were going to trade, you should probably pursue this.

No need to answer, but did you make a trade the minute you had control? If not, that may be your answer on whether to pursue this any further.

 

[ivinsfan]

Software glitch, had to do with mega corp moving management of our 401K from in house to Fidelity.

Why don't you ask your megacorp for the money you want?

 

[ivinsfan]

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.

In this scenario who is they?....

 

[RobbieB]

Software. The reason I like to do business in person. On paper. Sign the form.

No software for me thanks -