Ameritrade and Onerous Reorganization Fees

By on March 20, 2020

AgonyMy son has a Roth IRA with Ameritrade. One of his holdings had a 1:50 reverse split and Ameritrade charged $38 for a reorganization event. When I looked up the position it was basically worthless (4 cents). That’s not 4 cents a share, but the position was worth a total of 4 cents! I was shocked and dismayed. I’ve always recommended Ameritrade to friends when they ask where to place their money. That ended this week.

When I complained and threatened to close accounts with substantial assets they sent me a message indicating splits were very labor intensive (I kind of doubt this) and they couldn’t do anything. Here is the message:

Thank you for giving me the opportunity to assist you today. I would be happy to provide some additional details.

Upon review of your account, I can confirm that this recent reorganization was a 1:50 reverse stock split of Key Energy Services.

Reorganization fees are charged to cover the cost for TD Ameritrade to re-register the stock involved and to facilitate the reorganization in a client’s account.

Reorganizations are very labor intensive and TD Ameritrade is charged fees by the depository for their processing. TD Ameritrade passes on a portion of these “per event” fees to the clients involved to help keep our overall costs for all clients low; such as avoiding the need to charge monthly or inactivity fees.

I apologize, that we are not able to refund these fees for you. We understand that you must do what is best for you and your investment needs, but regret to see you go.

Lori Holtmeier
Client Services

I realize many years ago most brokers charged an annual fee of around $75 for IRA accounts so I supppose this is a way for them to make up that loss.

So this is a warning to Ameritrade customers. Be congnizant of your positions because any type of reorganization is going to be fee intensive.

I use several brokerages, but Ameritrade is the only one that I remember that charges this type of fee. My blood pressure is up enough over the past few weeks so I’m going to try to put this behind me as a “live and learn” moment.

My SMA portfolio (now basically defunct) is with Ameritrade and some holdings have become almost meaningless (UPL, VAL and RYAM come to mind). I’ll be consolidating these and several other holdings because I don’t want the aggravation of paying $38 after suffering crushing losses in these positions. I’m interested in shipping tanker stocks after reading this:

So these are probably some companies I’ll be investing in (DHT, EURN, LPG, STNG, TNK) and I’ll monitor the split calender here:

Disclaimer: It is very challenging to outperform a buy and hold strategy. Historically, investors have found themselves well-served over the long-term by investing regularly in a diversified portfolio of stocks or low cost, broadly diversified indexed stock funds. Past performance has no relation to future performance. Profitable trades are not guaranteed. No system or methodology ensures stock market profits. Although accuracy is strived for, no guarantee is made regarding the accuracy of data presented.

One Comment

  1. Jay

    July 23, 2020 at 9:41 am

    Same just happened to me. 7/23/2020.
    So the fee is still $38 and is bogus.

    Tasty and Robinhood do not charge this fee.

    I do like to play this game. In this case BBX just went though a 1:5 with a starting price of about $2.80 and came out at a free share of #13.35. us penny traders, free money

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