re: settled-funds violations in cash accts (IRAs), ridinycurve relates the following from a Fido rep:
A purchase on Monday settles at the close Thursday. If the security is sold in the intervening period, the funds can be redeployed on Friday. The sale date does not enter the equation, and the clock starts over on Friday.
i recently asked a Fido mangler about the same example and was given different info. i was told specifically that in this type of example the sale date determines when the funds are available for a new purchase--i should say, are available without incurring a settled-funds violation. it may be possible to do the trade earlier, but a violation would occur. once you get a certain number of violations within a certain time period, they slap a settled funds trading restriction on the acct and it can ONLY trade settled funds (i.e., you cannot sell a stock and immediately buy another with the proceeds; you have to wait three trading days).
so, even within Fido they cannot keep their story straight. no wonder i get these damn violations all the time. i the meantime, i've gotten another violation over at Schwab. they sent a notice which includes the following guidelines, which may or may not be the same as at Fido. this is interesting because apparently you can get a violation on a SALE, whereas i always thought it only occurred upon purchase with unsettled funds. in any case the only solution i see is to keep multiple borkers and shuttle funds among accts when one acct gets restricted.
Important information about trading without sufficient funds.
When we place orders for accounts without sufficient settled funds or securities on deposit, we are required to monitor the account to make sure it complies with these conditions:
You promptly make a full cash payment with settled funds, or deliver previously owned securities into the account within the payment period; and
You do not sell the securities purchased until full payment with settled funds has been made; and
You do not make payment with the proceeds from the sale of other securities made after the trade date.
If these conditions are not met, we are required to withdraw your ability to trade without sufficient funds on deposit and this restriction will last for 90 calendar days. |
