Broker and Brokerage Information Exchange

We have lots (a really lot) of messaging that deals with various brokers and what is allowed/not allowed by them in terms of buying/selling new issues on the Over The Counter (OTC) markets and many other issues.

For instance some brokers allow pretty much any transaction. I personally like eTrade as I have never had a trade rejected by them–while I have an account with Fidelity it restricts my ability to buy Fixed-to-Floating rate issues.

This area is for an exchange of information on all the various brokers–good, bad and otherwise.

Like all the various discussion pages if folks could ‘stay to topic’ the page will be more valuable to all, but staying to point.

If you want to start a new thread go to the bottom of the page and do a comment–instead of a reply.

167 thoughts on “Broker and Brokerage Information Exchange”

  1. Anybody having problems with merril Lynch website?

    Can’t login and the customer service was very useful as they are with other customers but can call me back in “more than 3 hours”.

  2. Is there anyone with a Charles Schwab account that could send me a ‘refer a friend’ code? The code is needed to get the $500 new account promotion. Is there a way to get private messages on this board?

  3. Forbes has a nice writeup on how Robinhood makes money and was the first brokerage to offer commission free trading. “Payment for Order Flow” accounts for 70% of their revenues. This is where large algorithmic trading firms like Citadel and Virtu pay brokerages for their orders. They pay Robinhood 1.7 cent/share for their stock orders, which is higher than other brokerages receive. Obviously Citadel and Virtu think it is profitable to buy the orders from Robinhood. I am guessing you would have less limit orders filled for the low liquidity preferreds we discuss around here. But Robinhood probably works fine for high liquidity issues like the FAANGS.

    Robinhood has added 3 million new customers this year, far more than the other brokerages. It has 13 million customers, close to Schwab’s 14 million. The tone of the article is negative on Robinhood. Personally I do NOT have a Robinhood account, but if you are considering opening one, the article is worthwhile.


  4. The Charles Schwab Corporation (“Schwab”) today announced it plans to integrate the award-winning thinkorswim® and thinkpipes® trading platforms, education and tools into its trader offerings for retail and independent advisor clients following its acquisition of TD Ameritrade.

    “Our plan to adopt the thinkorswim suite of products and educational resources reflects its status as one of the strongest retail active trader platforms in the industry,” said Barry Metzger, Senior Vice President of Trading Services at Charles Schwab. “For users of Schwab’s StreetSmart Edge® platforms, there is no change. As we look ahead, we intend to thoughtfully combine the great capabilities, tools and service at both firms to provide a unified, world-class trading experience for clients.”

    1. This should have been the press release….

      Charles Schwab Announces Plan to Rename thinkorswim Trading Platforms to sinkorswim(mostly sink) as Part of TD Ameritrade Integration

      SAN FRANCISCO–(BUSINESS WIRE)– The Charles Schwab Corporation (“Schwab”) today announced it plans to rename the award-losing thinkorswim® to sinkorswim(mostly sink) following its acquisition of TD Ameritrade and numerous outages of the platform.

      “Our plan to rename the thinkorswim suite of products and educational resources reflects its status as one of the most volume challenged retail active trader platforms in the industry,” said Barry Metzger, Senior Vice President of Trading Services at Charles Schwab. “For users of Schwab’s StreetSmart Edge® platforms, there is no change. As we look ahead, we intend to thoughtfully combine the great capabilities, tools and service at both firms to provide a unified, third-world-class trading experience for clients.”

  5. Schwab’s “Street Smart Edge”….

    Account details screen shows I am up $68 today…bar at the top shows I am up only $38. My “position dollar value” is less than my “total account value” by a whopping $3,000…. And my positive cash balance is not included in the former, but supposedly is included in the latter.

    Schwab says this has something to do with current prices vs. liquidation value. I say pick one and stick to it.

    1. Yes, very confusing to say the least. These variations in value seem to have worsened with the last upgrade of StreetSmartEdge.

      1. Yes….now my “today’s change” is plus 2623 while my account details day change is plus $397…maddening. I don’t think the Schwab system is set up for securities with wide spreads.

  6. Buried in a New York Times story about RobinHood was this:

    Robinhood’s website has also gone down more often than those of its rivals — 47 times since March for Robinhood and 10 times for Schwab — according to a Times analysis of data from, which tracks website reliability. In March, the site was down for almost two days, just as stock prices were gyrating because of the coronavirus pandemic. Robinhood’s customers were unable to make trades to blunt the damage to their accounts.
    . . .
    Plaintiffs who have sued over the outage said Robinhood had done little to respond to their losses. Unlike other brokers, the company has no phone number for customers to call

    Tex comment: Not a pretty picture for RobinHood or Schwab on outages, but at least at Schwab you can call somebody and vent your frustration. They will not be able to get the platform back up but will be sympathetic.

    Link to full article:

  7. Anybody own Great Ajax (symbol AJXA) notes in a taxable account?
    they had multiple 2018 and 2019 deemed (non-cash) dividends which my broker just got around to posting, so I just got a corrected 2018 form and will also be getting a 2019 corrected form with this and the First energy dividends.

  8. First Energy just reclassified their last 2 dividends of last year out of nowhere.
    So anyone who owns it in a taxable account may get a corrected 1099 soon.
    Silver lining is it went from 100% dividends to part ROC for one and all ROC for the other.

  9. TDA will not process sell orders on CTV until execution of the partial call on this issue. This is BS. So much for the quick flip.

  10. Anybody own XYF?
    It paid an $.08 dividend in April 2019 that my broker got wrong.
    They reported it as non-qualified, but it is qualified.

          1. It is a mixed breed to be sure. US ADR of a Cayman Island Co holding Chinese assets.

            The prospectus is fair. The company THINKS the distributions will be dividends under US tax law (as opposed to return of capital), but even that is qualified by the statement that the company doesn’t keep US tax books. There is nothing indicating that they expected them to be qualified.

            But considering the nature of the assets held I would think that if one could unravel the thing you would find the divis are indeed unqualified.

            I’ve been down this road several times before, with different securities and different brokers. Absent clear evidence brokerages won’t change the tax characterization of dividends. In most cases, the brokers actually depend on third parties to establish the tax character of distributions.

            This is not one I’d go to the mat over.

            1. The qualified status is based on the fact that it trades on a recognized securities exchange.
              The fact that they don’t follow US GAAP means they will not qualify for return of capital treatment.
              They hedge the qualified status like everybody else because besides the exchange or treaty test, there is a holding period test as well, which is obviously unique to each investor.

              1. Justin – REIT “dividends” and not qdi, partnership distributions are not qdi, BDCs distributions are not qdi, and so forth.

                Trading on a recognized US exchange is not the only test. The principal tests are the underlying nature of the distributions and the tax characteristic of the payer.

                I did not do a deep dive on this security but a quick look did suggest to me that the distributions would not be qdi, even if it were a US entity.

                But go for it if so inclined. But do the rest of us a solid and let us know the details and the outcome so we can learn from your experience.

                I’m planning a bit soon on my 3-month battle with Vanguard and JPM on dividend withholding.

    1. Tax treatment of foreign payments is often a crap shoot. In most cases I know what the tax treatment should be but it often gets reported incorrectly on monthly statements or (more importantly) 1099s.

      My experience is that sometimes the fix is readily made and other time (Schwab) it will never be done. These days, I won’t invest more than one phone call in the process. If the brokerage can’t or won’t make the change I move my business.

      Lastly, I do point out that brokerages will often report dividends as non-qualified if recently purchased and flip them to qualified later.

      1. This is what one financial website says about holding periods:

        “For preferred stock dividends to be qualified, you must own the shares for at least 90 days during the 181-day window starting 90 days before the ex-dividend date.” When I recently asked Fidelity why my dividends weren’t showing up as qualified the 2nd level service advisor said they are extremely strict about the holding period and over the course of the year I should see this change on my accounts.

  11. TIAA-CREF’s money market funds.
    Expect others to follow.

    In a notice to investors, TIAA said it plans to temporarily waive fees on a pair of money market funds. Because US interest rates have dropped to near zero, even the funds’ low fees would cause investors to lose money in those investments. TIAA added that it cannot renew the waiver after the end of 2020. What’s more, it said it could recoup those waived fees as soon as next year, if US interest rates rise far enough to provide a positive yield.

  12. Received a survey from Fidelity’s bond desk. Below is the message I placed in the comments section. Feel free to use and send to Fidelity:

    I trade a lot of preferreds. Fidelity makes us call the bond desk to trade many of these preferreds, mainly fixed to floating….which happen to be most of the new issues. It is stupefying to think that I can trade Bitcoin, triple inverse ETFs and penny stocks online, but can’t trade preferred stocks from major corporations!

  13. Marcus (Goldman Sachs) dropped their MM rate to 1.30%. No penalty CD is still 1.55% but I don’t expect that rate to last long. Or 1-year CD is 1.60% and you have 30 days to decide if you want to fund it or add money at that rate.

  14. I just posted a reply to Gridbird’s comment down a few posts and realized that there haven’t been any posts on this thread in a week.

    Anyway….anyone have any experience with trading at J.P. Morgan? My preference has always been for Fidelity because of their platform, easy to understand tax reporting and excellent cash sweep. But the sweep is now less attractive with rates around zero (although one can get .4% in FZDXX).

    Anyway, my big beef with Fidelity is their aversion to FTF preferreds. JP Morgan is offering a nice bonus to move money there. $725 for $250K+

    1. Retired, I transferred some money to TD last year and got a bonus…And forgot about it..Well until I was reminded on my brokerage forms I downloaded into Turbo. Looked at it, and thought, “What the hell is this”. Well they didnt forget, and Uncle Sam got his cut from it also.

    2. Are you talking about You Invest or their managed accounts? You Invest is a primitive platform, you can trade but you can’t do much else. And you won’t get as much price improvement either. I opened an account last year for the bonus and free trades, hardly worth it and now that everybody has free trades I don’t recommend it. One advantage is if you want premium checking you can use your brokerage balance as part of your required minimum.

      1. I had to look up “You Invest”…that must be what is being advertised. Thanks for the analysis. We often forget the benefit of price improvement.

        The only “managed account” I would consider is an index ETF.

      2. Can I ask about your experience with youinvest from JP Morgan? Are you able to read research from JP Morgan? I would love to have access to their research, but outside of youinvest don’t think that I will qualify for it. I tried calling them, the guy I spoke to did not seem to understand my question at all.

  15. i just saw this comment.
    Brokers monitor what they can through data feeds from vendors. There is no thinking or common sense at all behind it. The NYSE has reporting standards. The pink sheets do not. A typical broker has 300,000 securities on their books. it isn’t cost effective to review them all.

    Remember that the way you can tell if a security is delinquent on their filings is that the ticker symbol changes.

  16. Just wanted to ask you all who you use as your broker/dealer and if you are very happy with them. I use Schwab and will just say I have a boatload of money with them (all of my assets) but I find their service horrendous. Several times now just lately they have really dissapointed me greatly. So if you feel you get top notch service and great research plus new bond offerings without getting shut out of deals I would love to hear from you. THANK YOU.

  17. Merrill, blocked my access to my accounts for the 2nd time in 2 months. I sold some of my sock drawer issues to free up cash for investments. I did this in early March. A few weeks later they audited my trades and blocked my accounts because IPWLK is considered low price is what they said. After 3 days i talked to 3 people and they unlocked my accounts in Mid March. Yesterday they locked my accounts again because they did another audit (another auditor found the same transactions and froze my accounts again. This is day #2 and my accounts are frozen, and already talked to 2 people.

    No alerts, no communication, no phone calls, and they have auditors that are shutting off accounts with no communication. Better yet, they are auditing stuff that took place in 1st week of March. They have no guarantee a 3rd auditor will come along and shut my accounts off again for the trades that happened in March.

    After talking with a guy today.. they have securities on a special list. If you sell them (not buy them)… at some point in time in the next several weeks and auditor will find it and shut off your accounts.

    After the 2nd call today (my accounts are still frozen) they have apologized a dozen times, but said there is not a lot they can do. It is in the hands of auditing and they set the rules.

    So i have begun the process of transferring a few million dollars out of Merrill. I cant deal with this any longer. In my last conversation, I said, “can you guarantee me someone in May will not shut off my accounts for what happened in March.” The answer was no. So i asked, “did i violate any laws? Did i break any SEC rules?” The answer was no. We have policies that are in place that are not communicated to clients. We have auditors that follow those policies and act upon them

    Finally i asked, “why don’t you call me? Why dont i get an email? Why dont i get a text message when my accounts are disabled?” The answer was we dont have that capability. They wanted me to call them when i do a trade so they can help with this process. I said, “how can you help me with that? You are already helping me and it is day 2 and you cant unlock my accounts. Last time it took 1 week with me calling in every day.

    This is all recorded… and i thanked them for their time, and said, i will begin the process of liquidating my accounts.

    1. Mr. L thank you for sharing. What did they mean by the trades were low priced? I haven’t made a decision yet on which new broker to go with as I don’t want to add to my account with TD which is scheduled to merge with Schwab later this year.
      My fear is which broker is maybe a sitting time bomb. Please anyone don’t laugh, with all that is going on in the market what do we know about troubles behind the scenes maybe happening at them? just last week IBKR had a 88 million dollar loss when it had to make up losses that exceeded the value of some clients accounts. Believe me, they probably were not the only brokerage affected. There was talk last week of liquidating some oil ETF’s and closing them out.

      1. Charles, I asked 2 guys that same question. When they told me it was blocked due to a low price policy, i asked, “What is low price?” One of them didnt know what that was. Both of them acted like they didnt know what to do and hasn’t seen this before. The 2nd guy said, “Well i think it is because it is low price. So then i asked him, you think low price means penny stocks or cheap stocks? He said, “yes.” So i asked him to check on the price of IPWLK. He said, “umm.. it is $104. Then I asked him, do you think this is a cheap penny stock? Both of these guys are assigned to platinum accounts. After these 2 incidents… I am thinking platinum doesnt mean a thing at all.

        1. Mr. Lucky, Did you really slap them silly by showing them this “penny stock” is also IG rated too?

          1. My next comment was that this was a preferred stock and was issued over 20 years ago, so this is no fly by night shop, and the questions was: Do you know what a preferred stock is? The answer from one of them was: “I have heard of them.” I didn’t ask the other guy as he didnt seem to sure about anything. I think both of them are customer friendly, can speak on the phone, and that is probably why they have their jobs.

            1. Mr. Lucky, Its not surprising they only vaguely know what a preferred stock is. I have ran into a 4-5 retired brokers past 2-3 years on golf course and they had no understanding of them either. BTW, IPWLK has several equal standing preferred issues still trading that were issued in WW2 era. And never missed a payment.
              The problem is the suits confuse, pricing, volume, size, and trading market with a blanket policy. What they dont realize is many of these preferreds actually traded on the “Big Board” and then got subsequently delisted by company itself. Which is immaterial because all the financials are there just like any others because the holding companies report them as that is what the holding company really is in the first place.
              Here is an example of Ameren doing this in 2007 before subsequently delisting more after there other acquisitions were consummated.
              ST. LOUIS, Nov. 14 /PRNewswire-FirstCall/ — The boards of directors of two utility operating subsidiaries of Ameren Corporation (Ameren) (NYSE: AEE) today announced they are taking steps to voluntarily delist a total of five series of preferred stock from the New York Stock Exchange (NYSE).
              This action is due to the small number of shareholders and small volumes traded and allows Central Illinois Light Company (AmerenCILCO) and Union Electric Company (AmerenUE) to reduce administrative costs associated with continuing to list the preferred stock.
              AmerenCILCO and AmerenUE will continue to file periodic reports with the Securities and Exchange Commission on Form 10-K, 10-Q and 8-K after the delisting of all five series of preferred stock and the deregistration of AmerenCILCO’s 4.50% Series preferred stock.
              With assets of $20 billion, Ameren serves 2.4 million electric customers and one million natural gas customers in a 64,000-square-mile area of Missouri and Illinois.
              There is no way they can justify in any manner these should be flagged more than say PW-A which is NYSE a tiny preferred of under $4 million. And its financials are certainly not any more robust…And if you look at the pricing of today, it is more volatile than these are.
              But you cant fight city hall, and these problems will continue because of their own catch all lazy procedures.

              1. Gridbird…not surprised that the retired brokers you have met did not know much about preferreds. I was about the only one in my office who did much investing in them. And heck…even I had never heard of many of the obscure issues you know about.

                The new $25 par issues paid a commission of 50 cents a share, which was not bad….especially considering I could tell the client that my commission was paid by the offering firm.

                It’s strange….back in the 80s and 90s brokerages were churning out tons of new closed end fund offerings at $10 with *cough* cough* no commissions. The firms had contests with prizes for those that sold the most. Brokers loved to sell those….and when the brokers pulled the support a few months later…the fund dropped to NAV…then proceeded to drop to a discount to NAV…it was blamed on market action. But wait…there is a new closed end fund on offer….
                Fortunately this nonsense pretty much dried up after the 90s.

                And mine was a large well respected firm….Merrill Lynch!

                1. Retired, Im not so sure your old method wouldnt have been a bad one. You call me up in 1968 and say “I got a preferred IPO offering of CNTHP 6.56% par, do you want some?” Then I buy them, get the stock certificates, put them in the bank vault and forget about them. You just collect the dividends quarterly and give no other thought to it. As you wouldnt be worried about how they were trading because preferred stock prices in the daily newspaper were not shown anyways. In fact, I bet they rarely traded at all back then, being what they were and no real active conduit for trading at the retail level. It was just an annuity with some residual value for the next of kin if they want to figure out how to sell, ha.

                2. Though never really a student of preferreds back then, or now for that matter, I knew enough to wonder why anyone bought a new issue preferred…. To generalize, the preferred market almost always seems to trade at a discount to NAV as an asset class and by definition, a new issue preferred would be priced at a premium to NAV because of issuing costs… So, the day the new issuer collects his cash to invest on a $10 issue, he has no more than $9.97 to put to work for the shareholders. So Day 1, you pay $10 and NAV is $9.97 and the market place has the tendency to value that NAV at a further discount once it begins trading…. So, if the fund looked interesting, it seemed always to make more sense to wait to buy it in the secondary. Those little contests must have worked well, RB! lol. One could almost always make the argument against buying new issue CEFs I make vs buying annuities in that I’ve always believed annuities, when they’re issued, are sold, not bought, only in the case of annuities, they’re never completely understandable by anybody anywhere at any time. lol

                  1. 2WR,

                    I think your post confuses preferreds and closed end funds. Substitute “closed end fund” for “preferred” in your first three mentions of preferred and you have it correct.

                    And it’s even worse than your think…funds were issued with a 3% premium to NAV, so the starting NAV was $9.70…not $9.97.

                    1. Not worse than I think, worse than I write! Thanks for pointing out my morning fog on both points. Yup, 3% and yup CEF, not preferred. Hopefully I’ve now exceeded my daily dose of DUHs!

                    2. 2WR, That stuff never ends despite how little or hard we try…I just noticed a comment I wrote in another forum. My word use intended was “accept”, but I wrote “except”…Really? Well nuttin I can do about it now, except look stupid…..

        2. To put some context around this.
          It isn’t “low price” per se.
          It is related to investments where data or liquidity is lacking. (which mostly happens among thinly traded pink sheets, and stocks below $3.00), hence the name.
          I don’t think it was auditing. It was likely compliance that flagged them. I don’t know about Merrill, but at other firms, there is an indicator on your account (related to suitability, and sophistication) that will allow these trades to go through, if you qualify for it.
          They are (and rightly so) trying to prevent lawsuits over investment losses.
          The problem is that these preferreds get lumped in with all the pump and dump stocks because to a compliance system, they have most of the same hallmarks. However, that being said, they don’t have ALL of the same hallmarks and could be easily flagged to avoid being picked up. (e.g. having an IPO in 1963 is one of them)

          1. Justin, having dealt with this as a consumer, its their lazy no brained reliance on catch all screening tools when the slightest bit of common sense could override this. One 10 second cursory look at the 10 year stock trading price and credit rating would give them an “oops” moment…I know what your saying but this saving from lawsuits is flimsy when many of same outfits allow 2x leveraged notes, CBL, and JCP stock and debt notes to be freely traded. They try to create a screening tool to solve the problem and it doesnt satisfy on either spectrum.

            1. Grid- that isn’t a fair comparison given the circumstances. None of your examples are low float, low avg daily volume that could be prone to pump and dump schemes that pop up in otc symbols which compliance is trying to avoid. From a customer point of view its frustrating, but from a compliance point of view I get what they’re attempting to do. That being said, there needs to be processes in place to whitelist securities and if escalating enough doesn’t solve it, probably time to find a new broker. Personally, I think there needs to be new rules & regs around suitability, sophistication and how the whole accredited investor qualification works.

              1. MCG, Risk is just as prevalent and in fact more looking at the charts of those liquid dirtbag stocks losing 90% of their value than tradeable issues being around upwards of 75 years plus and NEVER approaching those losses. That being said, I fully understand what your saying…But you havent dealt with losing appeals to transfer securities of these types…I got the online reps on my side and my local broker calling and supporting me…As they actually took the time to listen and agreed with me.
                But “The Suits” ,which are the downfall for many corps, denied the appeal anyways..And dont say its all about consistency..Because on appeal they did allow AILLL to be moved, but that was because it was the only stranded asset left in my Roth transfer. So that decision had nothing to do with quality control, but just “throwing me a bone”. Nothing else from 2 other taxable accounts…And yes IPWLK was a culprit here too. But also my CNIGO and half dozen or so others from regulated utilities with regulated and SEC filings.
                And the irony of it all is they will let me buy these “easily manipulated stocks”
                from their brokerage account….But transfer them? No that is too risky allowing these types to be transferred. What hypocrisy.

          2. Hi Justin, I could have posted hours of transcripts. Yes, I pointed out to them that “low price,” probably means low trading volume. Not sure they agreed with me, but said, “Hmmmm.” Their repeating phrases were more like, “I’ll check into that.”

            Yes, they repeated “auditor” and “audits” several times, so it was auditing. And that is what auditors do. They ensure compliance with policies that are in practice. Again, he said the auditors are looking at records that have taken place. They also said multiple times… “the auditors have their ways of doing things, and they can’t do anything about it.”

            I also asked each one of them, “How can we prevent this? What form can I sign? What can be done to my account so that it shows I know what I am doing? ” I also showed them that I bought at 101, and was selling at 104, and that lead into questions around what was I doing wrong.

            I am not sure what these guys know. They probably know something. But I am not so sure they 2 could fight their way out of a wet paper sack on the phone calls I was on.

            My advice for anyone, is that if you have a job, you should make it a goal to understand all the aspects of your job. You get passes for a jr member, and or new hires, but make it a goal to learn. Every time you run into a situation, a word, a rule, or anything in your job you do not understand… make it a task/goal to understand everything about that.

        3. Lucky,
          The only consistency with ML is that there is no consistency. The higher I climbed in the ranks of service tiers, the worse the ‘service’ got. Can’t go any higher than I am now and their reps usually are not at all helpful and if you call 3 of them, you’ll likely get at least 5 conflicting answers to the most basic questions.

          There is a form that you can sign and you will be given less hassle when trading certain illiquids. It has to be signed/renewed on a yearly basis – last I knew. You’ll still occasionally be banned from buying IPO stuff until days after it’s available for purchase at many other brokers and occasionally you’ll be allowed to hold something you already own but not be allowed to buy any additional shares. Sounds like you are already familiar with some or all of this.

          They really don’t care if you take your $ and leave, they really don’t. It makes no sense. I thought they were the best folks ever, up until about 2 years ago when MAJOR changes began to happen. My understanding is that they are being repeatedly sued by increasing numbers of investors who can’t own up to their own stupidity and therefore, want ML to compensate them for their ignorance. I only stayed for the free trades, but since that is now a moot point, there is little holding my accounts there.

          BTW, I echo what Justin says. Low priced has nothing to do with the actual $ amount of the security. It has to do with where it is bought (OTC, non NYSE boards, etc), the lack of IG ratings, and the $ amount of the offering. If I recall correctly, low priced was defined by a lack of IG ratings and a sub $300mm offering size at IPO… But ML may have changed that set of definitions. I’m just relaying what I have gathered from numerous Platinum rep calls over the last year or so.

          1. A4I,
            I was holding NRT for a while and followed it for years. I knew the seasonal ups and downs and somewhat the market for this stock. I felt comfortable with the trust having low overhead costs, long term existence (40 / 50 yrs )
            and majority owned by a church in New York state. TD let me buy it and yes trade it. I was contacted on SA by another reader who implied it was a perfect for buy and sell trades being low cost and low volume.
            As I saw the value destruction happening in gas commodities, the regulation in Germany, Nord 2 and LING tankers I got out.
            It had a lot of the indicators of what you say ML would flag a account for, yet TD let me own and trade it.
            On the other hand I have owned well known companies, with large trading volumes that I was taken to the cleaners on. I have also received letters asking me to join class action lawsuits by ambulance chasers. If there was no overt crime, I figure I only have myself to blame.

            1. It has one big indicator. An NYSE listing.
              It trades on the NYSE, which has strict disclosure requirements. Those preferreds do not.
              No broker would ever block an NYSE listed security that was compliant with filings.

              1. But see that is where they are screwing up..IPWLK does have strict reporting standards. They are issued right along with AES the holding company. They are screwing up and thinking this to be a small stand alone issue when it is not.

          2. A4I – I have concluded that being in the “platinum” group, by whatever it is known at your brokerage, gets you one thing: your calls are answered faster. The people you get are no better; they can’t or won’t do any more for you; and good f%#*$@! luck getting them to change a decision, much less a policy.

            I have gone through hour-long calls through 4-5 layers of personnel, to no avail. I don’t have time for that. Walter Wriston famously said many years ago that capital goes to where it is treated best. While he had much bigger things in mind I apply the same concept to where I do my brokerage business. I will be closing out Schwab as soon as my time permits and I will be moving some of my Vanguard holdings to greener pastures.

    2. Mr Lucky,
      Take a look at Consumer Reports on line about ML. Take the complaints with a grain of salt, but two takeaways I got was people complained how difficult Merrill made it to move a account. One person mentioned getting sent the wrong paperwork 3 times and another said they took past the 60 days allowed to transfer a 401K then sent a check instead of direct transfer to new broker so they ended up paying taxes.
      The other thing I noticed, was it seemed if a dividend came in after the account was moved they didn’t tell the former customer until they sent them a monthly statement there was still money in the account and by then they might of even charged a maintenance fee.
      What I got from this was probably have a new account funded and set up with new broker and then if possible move the assets that don’t have payments coming up so they don’t get left behind.
      I am just speculating, not having had this experience before, maybe a few other people could tell us their experiences.

    3. This strikes me as strange. Merrill always had “protections” in place to limit the buying of gray market or low price issues…..but you were selling!
      Can’t explain that…..

      1. Retired Broker. That was one of the many questions I had for them they could not explain as well. I asked, “So I am allowed to buy these, but I can’t sell what I have purchased? So why let me buy in the first place then? Again no answers other than, “I’ll check into that.” All they could tell me was that auditors have flagged the “sell,” and not the buy.

        1. Oh, no they flagged the buy as well, and are probably self-disclosing it to the SRO (FINRA) as a newly discovered compliance risk related to suitability risk based on your account profile.
          For whatever reason, you are tripping up the suitability screens. Did you fill them out correctly as to income, investing length, sophistication, portfolio goal? If you filled it out as conservative investing goal with low risk, those illiquid preferreds are going to light up the compliance screens like a Christmas tree.

          1. I suspect Justin is correct here. Mr. Lucky, I don’t know if ML has this like Fidelity does – but I would go online and pull up your account risk profile and ensure your portfolio goal / objective is set to Most Aggressive. Also make sure your investing sophistication is extensive.

            Some of these flags are set based on your answers

          2. Also, the Reps couch their answers in different terms based on your investing profile.
            There is a huge difference between a retired grandmother and a retired grandmother who ran a quant hedge fund..

    4. ML, thanks for sharing your experience with Merrill and the ongoing dilemma of trying to sell ‘low price’ equities in your account. I think it might be worth while for everyone to contact their brokerage preemptively and ask them to identify any holding that would be subject to such an audit and what the proper procedure would be for selling it.

    5. Lucky,
      I just queried Merrill about some of the issues you mentioned. Got multiple loads of HS from them. They rep said auditing doesn’t freeze anything. They are only concerned with free ride trades or people who don’t periodically check in with Merrill and update their phone numbers and email addresses. He said if your website access does get disabled, you just call them and they turn it back on after discussing the issue. I explained that’s not how it apparently goes, based on what you said. He said your information was largely false. He said they won’t restrict your account for trading illiquid securities or for buying higher risk low volume securities. I called BS on much of what he said. Bottom line for him was that if you have trouble selling something online, just call in. But don’t blame the auditing. Uggh…

  18. Fidelity and the Partial Call on OXLCO : Does anyone know what proper procedure SHOULD be for allotment of called shares on this one? Fidelity allotted for call only 1/3 of the amount of shares I owned prior to the announcement of the call on 2/11. I had none of the shares I bot after 2/11 called. The call notice ( says, “The Shares will be redeemed from each holder of the Shares pro rata based upon the number of outstanding Shares held by such holder.” It does NOT state anything about it being based on the amount of shares owned at any time prior to the call date, so I am thinking Fidelity may have handled this incorrectly… Naturally, they stonewall and say they did it right, period, and will not give me even a name of someone in charge or documentation of why they think this is right. Is anyone here in the same boat either at Fidelity or elsewhere where shares you bot AFTER 2/11 have (or have not) been called as per the 1/3 ratio? I have a call in to IR at Oxford to see what they say.

    1. There is a record date for when the call is effective. (I don’t know what it is since I wasn’t involved) So I’d think fido handled this correctly.

      1. mcg – My point was that there is no record date mentioned in the press release, so why would a shareholder believe there is one at any date right up to the call date? Granted my comparison is for a whole call, not a partial, but today, OCSLL was called. I received proceeds including accrued for shares bot even just 3 days ago…. Why should OXLCO have been treated differently and if for a legitimate reason, how was a shareholder supposed to know based on the documentation announcing the call or any other official document I could find??? Oh, BTW, two calls to IR @ OXLC today went unreturned…. or should I say 2 calls to supposed “IR.”

        1. aThey don’t have to mention it in the press release. The only thing that matters is the “notice of redemption” that the company issues to the depository and agent. the press release is a courtesy notification, not an official document with all the terms and conditions.

          The partial redemption mechanism involves a record date which establishes which shares should be segregated

    2. 1/3 of my shares with Fido were segregated upon call and I don’t think they were tradeable. I’m thinking the shares you bought were part of the 2/3 which were not called, because I don’t think the 1/3 portion were liquid. You get to keep 2/3 of your original holdings and all of the shares you bought after 2/11.

      Am I answering your question?

      1. Bruce – Thanks for the effort, but no. I got 13.5% of the shares I owned called when the pro-rata call was 33%. Statistically, that’s not possible… It does have something to do having no percentage of the shares bot after 2/11 being subject to call according to Fidelity. I am trying to determine whether or not that’s the proper way or if it’s a mistake on Fidelity’s part and if it’s proper, I’m seeking documentation as to why it should be proper as there’s no direction as such in OXLC’s press release regarding the partial call.

  19. Just a heads up that Schwab will no longer let you trade CBKPP (CoBank – Series F). I own 100 shares that were recently purchased through Schwab and tried to enter an order today and it was not accepted. They told me that only qualified institutional buyers would be able to trade going forward. They told me that I’d still be able to hold it in my account.

  20. I snagged some uepeo this morning at 103.35. I think that’s good for a 110 callable.
    But I wondered, vanguard seems to be sometimes letting me place orders without having the cash already in the account. Does anyone know the limitations of this benefit? Td doesn’t let me do that.

    1. Irish, Yes they do up to a certain amount…I dont know the number or percentage because I havent pushed it. I have had 50k out there before. But you have to know ahead of time what you are willing to flip ahead of time, or push cash into account to cover before market close…And dont sell an issue you just bought yesterday as those funds havent cleared. You will get a nasty email, and potential loss of privelage.
      TD, you need to set up a margin account to buy with no cash.

  21. I just wanted to report back that Fidelity accepted my shares of IPWLO and a few of my Canadian holdings from Schwab. I’ll probably proceed with transferring the rest of my illiquid and Canadian holdings to Fidelity. Just so everyone is aware, I believe there is a $50 commission per trade for Canadians with Fidelity. I’m planning to hold my Canadians so I can live with this. I can’t live with the incorrect tax classification thought at Schwab.

    It costs $25 to transfer out of Schwab. Fidelity tell me that they don’t charge to transfer out.

    1. Tex – thanks for the report. Were there any Canadian issues that Fido would not take and if so which one?

      1. I did a smaller batch in to Fido initially. They took everything. I’m planning to do the rest soon. I’ll report back if they reject anything. Based on my conversations with them (take that for what it’s worth), it sounds like they’ll take everything I’ve got.

  22. I just received my Corrected 1099 from Schwab. They changed SLMNP to qualified, but left ALP-Q and EBBNF as non-qualified. I am not really sure how EBBNF should be classified, but it seems like ALP-Q should be qualified. I’ll next see what documentation I can find in the prospectus and send that to them.

    1. My corrected 1099 is now showing IPWLO as qualified. The Canadians are still all jacked up and wrong. I spoke with client advocacy late last week and they were adamant that IPWLO and SLMNP were non-qualified. Investing is hard enough without having to battle this.

  23. I’m not sure if this was already posted but I received a corrected 1099 from Schwab today and SLMNP has been changed from non-QDI to QDI. Yay!

    1. Great news and thanks for the heads up! Just looked at my Feb 21 corrected 1099 and SLMNP was changed to QDI 🙂

      Unfortunately they also “corrected” Enbridge EBBNF to non-qual lol 🙁 Hopefully TNT will set them straight on that.

      Kudos to TNT, Tex and others who have been fighting the good fight on this!

  24. Vanguard agreed to correct NiSource to qualified.

    Schwab just phoned. While I received no confirmation, its issues are being evaluated/discussed. I was promised tomorrow a definitive on the CAN QDI issues.

    1. Thanks for the update TNT! You’re doing God’s work. I’ll keep my fingers crossed that you get a good outcome.

      I was dealing with Schwab’s client advocacy team last week and getting absolutely nowhere. They weren’t open to any of the points I was making. Even when I brought up the fact that the common stock dividends were qualified but the preferred was non-qualified, they shrugged it off. It was incredibly frustrating.

      If there’s any way I can help, please let me know.

    2. TNT – I have four Vanguard accounts holding NiSource and today I got corrected 1099s for all, switching NiSource to QDI.

      Here’s hoping Schwab can figure it out for the Canadian preferred.

  25. I’m going to attempt to transfer some of my OTC holdings out of Schwab due to the QDI classification issues. I’m trying to figure out which broker would be a better alternative for Canadian OTC/illiquid preferreds (SLMNP, IPWLO, etc.). Has anyone had experience holding any of these type of issues through Fidelity? If so, how has the tax reporting been?

    I already have a Fidelity account so that’s why I’m asking about them. I’d be open to others though.

    – TD wouldn’t seem to make sense since Schwab is in the process of acquiriing
    – Vanguard would seem to be off the table since they seem to have an aversion to OTC issues

    I think that leaves me with Ally, Etrade, Interactive Brokers and Fidelity to consider.

    1. Tex – do let us know what you find out.

      But scratch IBKR off the list for OTC as they don’t do OTC. But often an issue that trades OTC can be bought as a bond using a CUSIP. You have to try them one at a time.

    2. Tex, Ally would sell your left elbow if it had a ticker symbol. But they do not allow Canadian reset trades, and all pink sheet buys have to be under 10k per order. But you can call in a bigger order or do multiple sub 10k orders

    3. Fidelity doesn’t allow online trades for floating rate issues. They’re one of the best for what you can do there so you might consider opening two accounts.
      I still have an Etrade account which I don’t trade as much, mostly holds. Nothing wrong with them, maybe a little klunky to navigate their website if you’re used to something else.
      I briefly had an Ally account. Too many glitches with preferred stock trades. Since that’s what I do, I closed the account.

      1. Martin, they are clumsy at best, but outside of not allowing resets or the 10k limit they do a good job of trading anything. And they are somehow good on IPOs. Several times I had to buy there before VG or TD had access yet.
        But very wonky at times. More than once I showed a $0.00 balance and values disappear. I quit worrying as it always straightened out. I called once on it and they said they had back ups that had everything and it was fine. They were proved correct more than once, ha.

        1. I wonder about RBC Dain Rauscher, since they have a Canadian parent. Don’t know if they have online trading, though; everyone must these days?

  26. Schwab Qualified CAN Dividend Issue.

    Spoke today briefly with Orlando management, which third partied in cost basis team. Cost basis team was adamant that Schwab is correct. The Schwab system characterizes dividends through three means: 1. expected status, 2. received status, 3. corporate notification of status.

    The “Paid/Adjusted in 2020 for 2019” reflects Schwabs’ system initially recorded the dividends as qualified. Then corporate notices were received which altered the status to non-qualified.

    I told my Schwab representative, I did not believe the cost basis department had received any such documents. The lady representing cost basis became quite defensive.

    My representative tomorrow will reach out to each of the corporations which I have securities “paid-adjusted” to ask for definitive confirmation that the underlying corporation actually sent to Schwab a notice to change from qualified to non-qualified.

    I hold a few but not the totality mentioned here on the ILL site. Perhaps, all affected parties asking for confirmation from Schwab on the corporation’s notification to change the status of the dividends would be prudent.

    I have incurred damages with Schwab on a totally different matter and negotiations are ongoing. Schwab’s current offer to reimburse, while not what I would wish, I will probably accept. The emotion toil and time is overwhelming dealing with Schwab’s errors. And, they are reimbursing my accounting and legal fees.

    The only reason I was able to get these folks on the phone over the CAN dividend issue is this ongoing matter with Schwab.

    I hope this helps and I will post the results from Schwab when it provides me the documentation.

      1. Justin – the company in question is a REIT and for that reason I agree that the QDI issue is a question mark. Would be the same for a Canadian partnership.

        But Canadian preferred issues are almost 100% corporations, and in those cases it is not a matter of dispute. Schwab may not get it (yet) but in the case of a corporate issuer there is no legitimate question on QDI treatment of common or preferred dividends.

  27. Schwab has mischaracterized DCP’s preferred distributions again this year. DCP is a MLP. Having a MLP preferred distribution characterized as a non-qualified dividend means double taxation of the distribution as it is correctly reported on the K-1 and incorrectly reported on the 1099-div..

    Last year they characterized a DCP-B distribution as a non-qualified dividend on the 1099-div. It took multiple calls to get to a Schwab representative to take this issue seriously. I called DCP investor relations and their legal department so maybe they advised Schwab of their error. Finally Schwab contacted me and confirmed the DCP-B distribution was not a non-qualified dividend, it took them till April 5th to issue a corrected 1099-div.

    This year Schwab has issued a 1099-div with the first quarter DCP-C distribution as a non-qualified dividend while the remaining three quarters distributions are correctly characterized as MLP distributions.

    I am sure this will take multiple calls to get corrected, again.

      1. Ugh–I hate this. I have been with eTrade for 25 years and hate to see that relationship disturbed.

        1. Tim, you may find it beneficial. Morgan Stanley actually underwrites issues, and you may be able to actually get in on the good ones at issue price IPO. I have a friend who has them. He actually got to buy for example all the SR-A he wanted at $25. If memory serves we were getting our first shot at $25.50.

          1. Grid–hope that is the case–I worked for Morgan Stanley in a previous life–not a good experience, but it was many, many years ago.

      2. Ameritrade and Etrade both bite the dust soon after the race to zero commission. Was that the final straw?

        1. and more website problems at Fidelity. support staff budget cuts for the same reason?
          I couldn’t submit trade tickets this morning.

          1. Martin–just submitted the same order 4 times and each time it didn’t take the order and logged me out of the account.

    1. Schwab seems to have more of a problem on characterizing distributions than other brokerages and they seem to dig their heels in on their mistakes.

      I hear a lot of good things about Schwab but this problem needs a long term fix. Not one issue at a time, one investor at a time.

      Nice to know I opened a branch office in Thailand.

    2. My belief is that an MLP distribution is properly non-QDI as there is not normal taxation at the MPL level – it is a pass-through, tax-preferenced investment vehicle like a REIT so the income is taxed as ordinary income for an individual investor.

      1. Distributions from an MLP should not be reported as non-QDI. The dividends are not ordinary income. The distributions are tax free until they are in excess of your tax basis.

  28. I talked to someone in Schwab’s tax team today about EBBNF, SLMNP and ALP-Q being shown as non-qualified on my 1099. The person I talked to said these would only be changed if they receive instructions from the companies to change the classification. He said that EBBNF was originally shown as qualified but they received notice from Enbridge that the dividends should be non-qualified. Could that be right?
    He didn’t seem very familiar with the issue so I will probably try to talk to someone different after I get my corrected 1099 and see if anything is changed..

    1. No, he’s wrong. There are a bunch of people on this board who are raising this issue with Schwab. I find it very difficult to believe that Schwab has received instructions from the issuer to treat the dividends as non-qualified, rather it is a system glitch of some type. Waiting for response to all the information sent in relative to a list of Canadian preferreds qualifying for QDI tax treatment.

  29. My 1099 from Vanguard did not report the NiSource NIPRB dividend as qualified. I have owned it since 11-2018. I called them and they acknowledged the error and agreed to issue a correction. For what it is worth, you may want to check your VG 1099 for a similar issue.

  30. Best brokerage for fixed income investor for execution & cash/dividend management? Currently I have E*trade/Fidelity/Schwab accounts and all of them have something useful but none of them are complete.

    I like E*trade for their income estimator but OTC trades still cost $4.95. Also their link to full banking very useful.

    I like Fidelity for their gov’t cash sweep and free OTC trades. But it has a $50 foreign transaction fee for OTC.

    Is there somewhere better I need to try?

  31. I have accounts at both Vanguard and Etrade and both are IRAs so how they handle QDI is not an issue for me. But for my purposes day to day usability is most important, and I find that Etrade has a faster website (Vanguard webpages always seem to load very slowly) and a much better interface. For example, on the Order page on Etrade, the Bid/Ask is displayed next to each order. On Vanguard it is not, so I have to click on each individual stock on my Order page to get that info and wait for that page to load. Additionally, the stock info and charts on Vanguard is limited and basic. Both standard Etrade and Power Etrade platforms provide much more useful info. Vanguard is in dire need of an update to their platform. That said, Vanguard offers a sweep into their VMFXX money market which typically pays at the high end of the MM range (currently 1.5%) Etrade cannot sweep into a MM so I have to make a manual trade of excess cash into the MM (I am however able to use VMFXX at Etrade) which doesn’t settle until the end of the day. So in order to have cash available for trades I have to keep some cash in their non-interest bearing sweep account.
    This last issue is why I still keep my largest account with Vanguard.

    1. 2Chinooks- I’ve heard Vanguard has the least convenient UI.
      On VMFXX, Fidelity has a 1.5% gov’t sweep SPAXX and is the main reason I migrated retirement accounts to Fidelity. E *trade, I have to just bucket things back and forth between the premium banking account which has a ~1.5 interest only for taxable accounts.

      I’ve also noticed execution prices are slightly better than Fidelity.

  32. For anyone who will be contacting Schwab about QDI classification of Canadians and OTC traded illiquids, I thought the following may be helpful to cite in your discussions/correspondence. Please see the following excerpts from IRS Publication 17 (
    “Qualified Dividends

    Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. They should be shown in box 1b of the Form 1099-DIV you receive.
    The maximum rate of tax on qualified dividends is the following.
    • 0% on any amount that otherwise would be taxed at a 10% or 15% rate.
    • 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 37%.
    • 20% on any amount that otherwise would be taxed at a 37% rate.

    To qualify for the maximum rate, all of the following requirements must be met.
    • The dividends must have been paid by a U.S. corporation or a qualified foreign corporation. (See Qualified foreign corporation , later.)
    • The dividends aren’t of the type listed later under Dividends that aren’t qualified dividends , later.
    • You meet the holding period (discussed next).

    Qualified foreign corporation.

    A foreign corporation is a qualified foreign corporation if it meets any of the following conditions.
    1. The corporation is incorporated in a U.S. possession.
    2. The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Department of the Treasury determines is satisfactory for this purpose and that includes an exchange of information program. For a list of those treaties, see Table 8-1.
    3. The corporation doesn’t meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. See Readily tradable stock , later.
    Readily tradable stock.

    Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement 3 under Qualified foreign corporation , earlier, if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. For a list of the exchanges that meet these requirements, see”

    Table 8-1 lists Canada as a country that the US has a treaty with.
    “Dividends that aren’t qualified dividends.

    The following dividends aren’t qualified dividends. They aren’t qualified dividends even if they are shown in box 1b of Form 1099-DIV.
    • Capital gain distributions.
    • Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U.S. building and loan associations, U.S. savings and loan associations, federal savings and loan associations, and similar financial institutions. (Report these amounts as interest income.)
    • Dividends from a corporation that is a tax-exempt organization or farmer’s cooperative during the corporation’s tax year in which the dividends were paid or during the corporation’s previous tax year.
    • Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation.
    • Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property.
    • Payments in lieu of dividends, but only if you know or have reason to know the payments aren’t qualified dividends.
    • Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments aren’t qualified dividends.”
    To summarize, if you received a dividend from a Canadian preferred stock that is traded OTC (pink or grey), this company should appear to be considered a qualified foreign corporation due to the US/Canada tax treaty. The OTC aspect should be irrelevant due to the US/Canada treaty. If you received a dividend from an illiquid utility stock that is traded OTC (pink or grey), the dividend should be qualified since it is paid by a U.S. corporation.

    Just a word of warning about changing the qualified treatment on your tax return. As most of you already know, your 1099 gets reported to the IRS and they can very easily and automatically compare the 1099 to your 1040 and see that you changed the dividend income to qualified. This can result in a notice or audit. You could receive a notice saying you own additional tax as well as penalties and interest. Is dealing with an IRS notice or audit something that anyone really wants? Would you have to hire representation (attorney/CPA) and how much would that cost?

    I think it makes sense to fight this pretty hard with Schwab and try to get them to issue amended 1099s. At a minimum, they should have to explain how they are arriving at their conclusions that these dividends are non-qualified.

    1. Also, see below for the Internal Revenue Code that defines qualified dividend income. This would be cited as IRC Sec. 1(h)(11). Here is a link:

      (11)Dividends taxed as net capital gain
      (A)In general
      For purposes of this subsection, the term “net capital gain” means net capital gain (determined without regard to this paragraph) increased by qualified dividend income.

      (B)Qualified dividend income
      For purposes of this paragraph—
      (i)In general
      The term “qualified dividend income” means dividends received during the taxable year from—
      (I)domestic corporations, and
      (II)qualified foreign corporations.
      (ii)Certain dividends excluded
      Such term shall not include—
      (I)any dividend from a corporation which for the taxable year of the corporation in which the distribution is made, or the preceding taxable year, is a corporation exempt from tax under section 501 or 521,
      (II)any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), and
      (III)any dividend described in section 404(k).
      (iii)Coordination with section 246(c)Such term shall not include any dividend on any share of stock—
      (I)with respect to which the holding period requirements of section 246(c) are not met (determined by substituting in section 246(c) “60 days” for “45 days” each place it appears and by substituting “121-day period” for “91-day period”), or
      (II)to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property.

      (C)Qualified foreign corporations
      (i)In general
      Except as otherwise provided in this paragraph, the term “qualified foreign corporation” means any foreign corporation if—
      (I)such corporation is incorporated in a possession of the United States, or
      (II)such corporation is eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program.
      (ii)Dividends on stock readily tradable on United States securities market
      A foreign corporation not otherwise treated as a qualified foreign corporation under clause (i) shall be so treated with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States.

      (iii)Exclusion of dividends of certain foreign corporations
      Such term shall not include—
      (I)any foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a passive foreign investment company (as defined in section 1297), and
      (II)any corporation which first becomes a surrogate foreign corporation (as defined in section 7874(a)(2)(B)) after the date of the enactment of this subclause, other than a foreign corporation which is treated as a domestic corporation under section 7874(b).
      (iv)Coordination with foreign tax credit limitation
      Rules similar to the rules of section 904(b)(2)(B) shall apply with respect to the dividend rate differential under this paragraph.

      (D)Special rules
      (i)Amounts taken into account as investment income
      Qualified dividend income shall not include any amount which the taxpayer takes into account as investment income under section 163(d)(4)(B).

      (ii)Extraordinary dividends
      If a taxpayer to whom this section applies receives, with respect to any share of stock, qualified dividend income from 1 or more dividends which are extraordinary dividends (within the meaning of section 1059(c)), any loss on the sale or exchange of such share shall, to the extent of such dividends, be treated as long-term capital loss.

      (iii)Treatment of dividends from regulated investment companies and real estate investment trusts
      A dividend received from a regulated investment company or a real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857.

    2. I emailed Schwab’s CEO previously about another issue I was having. Here is his email address: I received a manager in the client advocacy group a couple days later.

      Here is the contact for a manager at Schwab’s client advocacy team in case anyone would like to reach out and try to get clarification on how they are determining QDI status on illiquids and Canadians. It would be great if you could report back on what you learn:

      I may be reached Monday-Friday at 1-800-468-3774, extension 48768, between the hours of 11:30 AM and 8:00 PM Eastern or; via email me at


      Dawnn Lone
      Resolution Manager | Client Advocacy Team
      1-800-468-3774 / Fax 1-800-977-0122
      211 Main St
      Mail Stop: PHXPEAK
      San Francisco, CA 94105

    3. Bob, you are a 100% correct getting it corrected at the source is the most prudent manner. But if they dont I would correct the error. One could send a note along.
      Your concern is warranted though, but a clarification notice could be sent. Its not the end of the world.
      Each year, the IRS sends millions of notices and letters to taxpayers for a variety of reasons. Here are ten things to know in case one shows up in your mailbox.
      Don’t panic. You often only need to respond to take care of a notice.
      One has the legal right to claim a legal deduction. Remember it works the opposite way also. Brokerage mistakes dont absolve tax payer from their tax obligations either.

  33. Brokers and Cdn preferred based on 2019 1099s and current order entry…

    Vanguard gets the QDI right on the few issues I hold there but will not allow new orders.

    TDA gets the QDI right on the few issues I hold there and will accept new orders on the 3 OTC tickers I tried. 1 without commission and 2 with commission of 6.95.

    Schwab gets the QDI wrong on each of the small number of issues I hold there. They accepted orders on the 3 OTC tickers attempted with zero commission.

    IBKR says they will be releasing the 1099s on Tuesday the 18th. You can buy any issue you like using TSX tickers and orders are executed on the TSX. No OTC orders allowed. CA$1.00 commission per 100 shares traded.

    1. Thank you Bob,
      I haven’t held anything at any broker other than my 401K at TD. I opened a account with Schwab but never funded it. My wife has her 401k at work with T Rowe Price and she received a bonus that is held with Morgan Stanley.
      I have contemplated matching her investment at MS and starting a diversification plan as she is 100% in her company stock

      What has been your experience with IBKR?
      Both Canadian and Australian markets seem heavily weighted to mining / commodities stocks. But with the recent wild fires in Australia, I think building stocks will benefit from the reconstruction.

  34. Been a long time Tim since I was here, loved your dividend Hunter.
    Here is my question on brokers. You have the Canadian forum here and in the past I have been interested in and invested in stocks there but my broker TD withheld 15% on dividends, yet in talking to another person over on SA ( Bea baggage ) she said her broker did not. So with the exchange rate and withholding ( which I know you can file to have returned ) didn’t seem worth it.
    Anyone here have any thoughts on this ? A different broker etc.
    This also may apply to Australian stocks.

    1. Charles, the only way 15% was not being withheld is the scenario that person had the issues in a tax free account. And even then some of the brokerages botched that up also. And sometimes it was an issue by issue case.

        1. Charles, My TD experiences in tax free was pink sheet CAD resets had no withholding and the grey issues did, so I jettisoned them. An on line friend raised cane on a grey market ERRAF and finally got it fixed correctly though.

      1. That is also a broker by broker thing, where some broker’s make the election for no withholding for some if not all of the retirement accounts on their books, and some don’t offer that service, or whether they charge a fee for this or what the criteria is, I don’t know.

  35. I used Fidelity at one time but they were too restrictive. After numerous phone calls they did not change. I switched everything over to Schwab and things are going smoother. As I understand and I can’t verify Interactive Brokers will let you trade anything as long as it has a symbol.

    1. IB won’t let you trade gray sheet OTC stocks, and they have limited certain other OTC stocks from being traded based on if they have any of OTC markets negative flags.

  36. I posted this elsewhere before I saw this new topic page. Schwab showed SLMNP, EBBNF and ALP-Q as non qualified on my 1099. All were held 6-12 months so holding time was not an issue. I plan to call them the first of the week.

    1. These errors are not caused by Schwab (or even by their 3rd party provider, Wall Street Concepts), but by late reporting from the dividend issuers. I suggest waiting through at least the first 2 1099 correction cycles and seeing if the problems are fixed before calling.

      1. David – How does that jibe with the problem only being reported by Schwab customers but not others???

        1. 2whiteroses – I don’t think your premise is correct (unless you are talking about Canadian issues, which I know nothing about).

          I happened to move a number of dividend paying issues from Schwab to TD Ameritrade during 2018, so I got to make a comparison last tax season. Both brokerages took several cycles to get the 1099s correct. TDA was faster to get the corrections out, but Schwab was much easier to work with to get the last few issues fixed. In no case were the problems due to the brokerages, it was always the issuers being tardy.

          There were a couple of cases where I had to contact the IR department of the issuer to get them to push out corrections to the brokerages. I hope I don’t have to go that far this year.

          1. BTW – QDI is easy – what you really have to scrutinize is the 199A reporting. I expect they will master that about the same time as the deduction expires.

      2. Absolutely wrong. It is 100% Schwab’s mistake.

        They may fix it, but they won’t do so without the hammer of complaints coming down on them.

        You can just wait if you will, but when the corrected 1099 comes out it will be as a result of the effort of others. Not just fate.

        I am naked in expressing my desire for others to take up the fight, so I won’t have to. I do enough for the cause as it is and am hoping others will do some heavy lifting here.

        Regards from the Lying, Dog-faced Pony Soldier state of Delaware

        1. I got no dog in this fight. I left them several years ago for ongoing problems I couldn’t get resolved.

          But next year I likely will when those goombas take me over again.

          Hang in. Meetcha at the crossroads.


    2. That is what I was thinking, 2WR. That cannot be accurate otherwise SLMNP wouldnt have been accurate for me and not others with Charles.

      1. I don’t think its SLMNP the older issues the dividend are being rep[orted as non qualified. Like IBWLK , I have the same problem.

        1. Max – Just to be clear, are you saying that Schwab reported your dividends from IBWLK as non-qualified on your 2019 1099? Did you own this security through Schwab in prior years? Was it reported as non-qualified in the past as well?

            1. IPWLK is clearly QDI. The prospectus even lays it out. Now granted it was issued when qualified tax breaks had a different calculation, but it is still qualified. IPL had a very profitable year, so its qualified.

  37. As I and others have posted, Fido restricts online purchase of F-F preferreds and baby bonds (but apparently not until they’ve been available for a week or 3 !?), yet allows online margin purchase of penny stocks, bankrupt stocks, preferreds which have suspended dividends, etc. I recently emailed my “private client” rep, who forwarded this on to the bond folks, who are supposedly looking into this. He says a lot of this stems from problems with pricing during the Great Recession. I also told him, FWIW, that unless this changes, I’ll roll over some of my retirement accounts into another brokerage IRA instead of theirs. For now, it’s wait and see.

  38. With regard to QDI treatment for illiquids and Canadian OTCs, perhaps it would be helpful to create a shared spreadsheet or something for people to report their holdings, broker, and what got reported on the 1099. I think having this info available for all to see could be really beneficial.

    1. Tex, I have been fortunate to not have to deal with ill guided brokerages concerning C Corp tax treatment on QDI dividends. Its really very simple for most. If preferred basically is not a Reit or an MLP, (foreign qualified with tax treaty is eligible also) it should be qualified. Provided the holding period is met and the dividends are being paid from earnings, or retained earnings.
      But garbage input equals garbage outputs concerning what they enter in the computers that spit out the incorrect tax info.

    2. Tex, I just received Vanguard tax form today. All were qualified there also. You name it no matter what brokerage I had be it TD, Vanguard, or Ally, they all were assigned QDI. This includes all Canadian resets, and grey issues like IPWLO, and Odd ducks like SLMNP.

  39. I am glad to see the new brokerage thread active. One can only accomplish so much by doing Google searches and the brokerage websites are hardly unbiased.

    The free, unfettered exchange of information re: brokerage costs and practices can be of great value to us all.

    Hope you all will contribute in that spirit. The good and the bad.

  40. I offer a random guess that with the elimination of trade commissions, VG and others are reducing costs where possible. I speculate there might be an associated cost with various OTC securities that VG would have to pay. Maybe they just want to skip the market for thinly traded issues. I really doubt any investor could sue their brokerage firm “because they didn’t tell them” an OTC security was risky.

    1. Jeff, that is the real reason. They didnt want to go free as they delayed. Then they saw these illiquid trades costing them dough. That is why TD charges for pink sheets. and I am fine with that.

    2. It’s actually worse than that for them. Exchanges pay for order flow, which is why your trades can now be free (never mind those that pay the most allow you to be front run consistently). If you don’t fit brokers’ model of selling liquidity, it will be harder to get service.

  41. All this stuff going on with Vanguard on this subject and Schwab on treatment of QDI sure doesn’t make me look forward to the day when Schwab/TDA happens…

    1. Excellent point and I share your concern.

      Will they keep both brokerage platforms and if not what will the new one look like? If they reduce to one I’d guess it would be Schwab.

      1. Schwab has made comments that strongly suggest they are going to keep their platform and not TDAs. I think they would rather not support ThinkOrSwim, a great trading platform that lots of people like at TDA, and they may end up keeping that if they get enough complaints / feedback. But I would certainly expect a lot of the rest to work more like Schwab than TDA

        1. I guarantee if Schwab elects not to keep TOS and this other b/s continues, it will surely open the door for me to explore alternatives… I have TDA and Fidelity now, but have not looked elsewhere beyond eTrade where I had a small account that I folded into Fidelity for some unremembered reason.

          And as far as Vanguard no longer accepting purchase orders in the four lowest tiers of the Over-The-Counter (OTC) market, you would think that Vanguard account protesters ought to be able to recruit support from many of the companies affected as well to mount a rally against this…. They are going to be hurt as well due to the implementation of this.

          1. 2Whiteroses
            It has been my experience during the very few times I contacted Canadian companies about setting up a U.S. otc symbol that they do not care because they themselves have nothing to do with setting up or being responsible for the symbols. It is done by the market makers. In fact, usually the Canadian companies did not even know the symbols exist. Things may have changed though.

  42. I dont know why Vanguard is so worried about THEIR exposure to pink sheets. They sure had no problem ripping $5,000 right out of my pocket when they sold me 1000 shares of EBBGF at $15 when it was trading at $20. They came back and disallowed trade 2 days later. But if I had screwed up and sold at $15 think they would have cancelled that trade? Ha, bet no.

    1. Vanguard has been tightening the thumb screws progressively for at least the last 3 years.

      Cobank was OK, then it wasn’t.

      Canadians were OK, then they weren’t.

      Now it’s the Pinks and the Greys.

      I’m feeling a bit like Friedrich Niemöller.

  43. NOTE–this starts off some comments. This was posted by a number of folks relative to Vanguard.

    This may be of great interest to many here:
    As a valued Vanguard client who has either traded or held securities
    included in the four lowest tiers of the Over-The-Counter (OTC) market, I
    want to alert you to a change in the way Vanguard will be handling these
    types of low-tier securities going forward.

    Effective March 4th, 2020, Vanguard will no longer accept purchases for
    securities in the following Over-The-Counter market tiers as designated by
    the OTC Markets Group ( The market tiers include Pink
    Limited information®, Pink No-Information®, Grey Market, Expert Market or
    securities designated with the status of Caveat Emptor (buyer beware).

    As you may know, the securities included in these market tiers tend to
    provide limited to no financial information, and in some cases, provide
    limited to no pricing information to the public. As a result of these
    factors, these securities can be more susceptible to potential fraud and
    manipulation in the market place, potentially exposing both our clients and
    Vanguard to increased levels of risk.

    Vanguard is committed to giving our clients the best chance at investment
    success. We believe this action is necessary to enable us to live up to
    that philosophy.

    If you already own a security which is included in one of the Over the
    Counter market tiers listed above, you can continue to hold this security
    or sell the security in your Vanguard account, however, additional
    purchases will not be accepted to add to your existing position.

    Additional information related to the characteristics of these market tiers
    can be obtained through the OTC Markets Group ( If you
    have any further questions, please feel free to contact us at 800-992-8327
    Monday through Friday from 8 a.m. to 8 p.m., Eastern Time.


    Brent Briney
    Registered Representative
    Vanguard Brokerage Services

    Vanguard Marketing Corporation, Distributor of the Vanguard funds
    Vanguard Brokerage Services is a division of Vanguard Marketing
    Corporation, Member FINRA(C) 2015 The Vanguard Group, Inc. All rights

    Posted on 02/07/2020 2:21 p.m.

    1. I got that phone call from Vanguard and gave them a piece of my mind about it. It was clear that their restriction wasn’t at all due to the state reasons (“possible fraud / higher risk” in OTC stocks), but that they were getting regulatory pressure, presumably from the SEC or FINRA to stop facilitating OTC trades. Why those guys care about small OTC stocks and not certain popular tweeters’ securities fraud (“$420 funding secured”) must come down to some politics I’m not privy to.

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