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To: Wyätt Gwyön who wrote (84103)	5/5/2007 12:39:33 PM
From: tom pope	Read Replies (1) \| Respond to of 206326

this is interesting because apparently you can get a violation on a SALE That's been my experience with Fido -selling a security before the buy had settled. Which limits my ability to sell if my stop is hit, unless the buy had been made against settled funds.

To: Wyätt Gwyön who wrote (84103)	5/5/2007 1:57:21 PM
From: tom pope	Respond to of 206326

This is a letter I got some time ago from Fido: Dear Mr. Pope: I am responding to your recent letter whereby you express your surprise at the letter you recently received from Fidelity Investments regarding trading activity in your traditional IRA. I am attaching a copy of your letter for your reference. Please be advised that the violation described in our letter is termed a "Good Faith" violation and can occur when a customer either has money in the account at the start of a trading day or when the first transaction in the account is a sell order. Our records indicate that the• transaction generating the letter you received was the sale of 1,000.000 shares of American Home Mortgage Investments (ARM) on February 27, 2007. The following scenarios describe how such a violation can take place. Cash in the account The customer has $10,000 in cash in an account to start the day. The customer purchases $10,000 worth of XYZ stock in that account then sells the position. The customer buys back the stock then sells it, again, in the same day. The account has $20,000 worth of buy orders but only $10,000 of cash to meet settlement. The initial buy and sell are valid trades. The second buy is valid but the customer either needs to deposit an additional $10,000 before selling or wait until the first sale settles before selling to avoid a good faith violation. Selling the same security leads to a good faith violation because it gives the indication that this trade activity is how the customer intends to meet settlement. No cash and initial trade is a sell The customer's account has no cash and is long ABC stock worth $10,000.00. On Monday, the customer: • Sells ABC stock for $10,000.00 Buys XYZ stock for $10,000.00 On Tuesday the customer sells XYZ stock for $10,000.00 The account has $10,000 worth of buy orders but no settled funds. Stock XYZ was sold before it was fully paid. This trade activity constitutes a good faith violation. If the customer had sold XYZ on Thursday, the settlement date for the sale of ABC, then the purchase of XYZ would be fully paid and no violation would have occurred. The penalty for three good faith violations in 12 consecutive months requires that we restrict the account for 90 days from the last good faith violation sale date. If an account is restricted funds must be in the account before a purchase order can be accepted. These funds cannot include trade date proceeds from previously held long positions. Funds must be fully settled. Customer purchases in a restricted account coded are only considered paid if sales proceeds have settled. If a customer attempts to make a purchase on Fidelity.com or Active Trader Pro in a restricted account using unsettled sales proceeds he/she is blocked from making the purchase. An error message is received when entering the transaction. Orders placed with a representative are not blocked. ! Important: Once an account is restricted due to free-riding or repeated good faith violations, the restriction applies to all accounts with the same registration and the same Social Security Number or Tax Identification Number. The type of trading activity (trading in and out of the same security) resulting in good faith violations and, potentially, a free-riding violation in a cash account may be permissible in a margin account (not in IRA accounts, however, as they are not eligible for the margin feature). I hope you find the information provided helpful. If you happen to have any additional questions please feel free to write to us or you may call us at 800-544-6666. Service representatives are always available to assist you'. Thank you for investing with Fidelity Investments. Sincerely, George Stasinopoulos Client Services Specialist