Go to Jeff Salisbury LWGate Home Page.From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] New trading restrictions
Date: Sun, 16 Mar 2003 18:17:57 -0500
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Jerome, there is absolutely nothing new about the rule explained in the =
attachment. What is confusing is your statement that you have yet to =
place a single transaction with them. Possibly this is simply a =
"boilerplate" notice they send every new client, however it indicates =
that your acct is being placed on a 90 day restriction because of this. =
Obviously, if you have not done a sale, then this notice is in error, =
and you need to tell Ameritrade this.
All this notice pertains to is selling a stock prior to it being paid =
for in full. Example: on Monday you purchase 100 shares of XYZ, which =
will settle Thursday (normal 3 day settlement). On Wednesday, prior to =
depositing funds for the purchase, a buyout is announced, stock shoots =
up, and you sell. So far, you are ok (as long as you didn't have insider =
info). Wednesday night, the end of day processing will show the computer =
that you sold before you paid (you were bringing a check in on =
settlement, Thursday). Even though you sold for a profit, you still must =
deliver funds to cover the cost of the purchase in its entirety no later =
than Thursday. Assuming you do this, you are ok, as then you have =
settled funds available on Thursday for the settlement of the buy. On =
the following Monday, the proceeds from the sale would settle, and you =
would be then able to withdraw those funds.=20
Had you wished to reinvest the proceeds from the sale on that Wednesday, =
you could have done that as well, since again the settlement date for =
that new purchase would not be until the following Monday, same day that =
the sale would settle.
Because a margin account can borrow against the value of the portfolio, =
it is handled differently, but the rules there are even more =
complicated. You don't need to use margin to avoid this problem, just =
make sure that you have sufficient "settled" funds on hand on settlement =
date for any purchase.
- ----- Original Message -----=20
From: Jerome Buckmelter=20
To: 'CANSLIM LIST'=20
Sent: Sunday, March 16, 2003 4:20 PM
Subject: [CANSLIM] New trading restrictions
=20
Tom Worley,
Thank you for your input. I followed your advice, and called Ameritrade =
requesting that they email me the new rule. It is attached. This is a =
"canned" response: It says, "Our records indicate that you have recently =
sold securities in your account prior to making full cash payment." even =
though I am a new Ameritrade customer and have never placed any orders =
with them yet. In contrast to my earlier discussions with Ameritrade, =
this new ruling does not appear to be from the NASD as they claimed, but =
rather from the staff of the Board of Governors of the Federal Reserve =
System as they now claim per the attachment. This "new rule" is further =
disturbing since the only alternative is to have a margin account which =
is not, according to the attachment, permitted for IRA's and custodial =
accounts. This could be devastating for us who are using the canslim =
system to build our retirement account. We will be forced to keep a =
large portion of our account in cash during a bull market in =
anticipation of a break out or we could be fully invested and miss every =
breakout by three days, after the sale settles. I guess the main =
questions are: is this just an Ameritrade internal policy as you =
suspected? Will other brokerages follow suit? What do you -- and the =
other canslimers -- think should be done about this onerous restriction? =
Again, Tom, thanks for all your help. Jerome =20
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<DIV><FONT face=3DArial>Jerome, there is absolutely nothing new about =
the rule=20
explained in the attachment. What is confusing is your statement that =
you have=20
yet to place a single transaction with them. Possibly this is simply a=20
"boilerplate" notice they send every new client, however it indicates =
that your=20
acct is being placed on a 90 day restriction because of this. Obviously, =
if you=20
have not done a sale, then this notice is in error, and you need to tell =
Ameritrade this.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>All this notice pertains to is selling a stock =
prior to it=20
being paid for in full. Example: on Monday you purchase 100 shares of =
XYZ, which=20
will settle Thursday (normal 3 day settlement). On Wednesday, prior to=20
depositing funds for the purchase, a buyout is announced, stock shoots =
up, and=20
you sell. So far, you are ok (as long as you didn't have insider=20
info). Wednesday night, the end of day processing will show the =
computer=20
that you sold before you paid (you were bringing a check in on =
settlement,=20
Thursday). Even though you sold for a profit, you still must deliver =
funds to=20
cover the cost of the purchase in its entirety no later than Thursday. =
Assuming=20
you do this, you are ok, as then you have settled funds available on =
Thursday=20
for the settlement of the buy. On the following Monday, the proceeds =
from the=20
sale would settle, and you would be then able to withdraw those funds.=20
</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>Had you wished to reinvest the proceeds from the =
sale on=20
that Wednesday, you could have done that as well, since again the =
settlement=20
date for that new purchase would not be until the following Monday, same =
day=20
that the sale would settle.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV><FONT face=3DArial>Because a margin account can borrow against the =
value of=20
the portfolio, it is handled differently, but the rules there are even =
more=20
complicated. You don't need to use margin to avoid this problem, just =
make sure=20
that you have sufficient "settled" funds on hand on settlement date for =
any=20
purchase.</FONT></DIV>
<DIV><FONT face=3DArial></FONT> </DIV>
<DIV style=3D"FONT: 10pt arial">----- Original Message -----=20
<DIV style=3D"BACKGROUND: #e4e4e4; font-color: black"><B>From:</B> <A=20
title=3Djsjbuck@myexcel.com href=3D"mailto:jsjbuck@myexcel.com">Jerome=20
Buckmelter</A> </DIV>
<DIV><B>To:</B> <A title=3Dcanslim@lists.xmission.com=20
href=3D"mailto:canslim@lists.xmission.com">'CANSLIM LIST'</A> </DIV>
<DIV><B>Sent:</B> Sunday, March 16, 2003 4:20 PM</DIV>
<DIV><B>Subject:</B> [CANSLIM] New trading restrictions</DIV></DIV>
<DIV><BR></DIV>
<DIV class=3DSection1>
<P class=3DMsoNormal><FONT face=3DArial size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: =
Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial">Tom=20
Worley,<o:p></o:p></SPAN></FONT></P>
<P class=3DMsoNormal><FONT face=3DArial size=3D2><SPAN=20
style=3D"FONT-SIZE: 10pt; FONT-FAMILY: Arial">Thank you for your =
input.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>I followed your advice, and =
called=20
Ameritrade requesting that they email me the new rule.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>It is attached.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>This is a =93canned=94 =
response: It=20
says<SPAN class=3DGramE>,</SPAN> =93Our records indicate that you have =
recently sold=20
securities in your account prior to making full cash payment=85=94 even =
though I am=20
a new Ameritrade customer and have never placed any orders with them =
yet. <SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>In contrast to my earlier =
discussions with Ameritrade, this new ruling does not appear to be from =
the NASD=20
as they claimed, but rather from the staff of the Board of Governors of =
the=20
Federal Reserve System as they now claim per the attachment.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>This =93new rule=94 is further =
disturbing=20
since the only alternative is to have a margin account which is not, =
according=20
to the attachment, permitted for IRA=92s and custodial accounts.<SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>This could be devastating for =
us who are=20
using the <SPAN class=3DSpellE>canslim</SPAN> system to build our =
retirement=20
account.<SPAN style=3D"mso-spacerun: yes"> </SPAN>We will be =
forced to keep=20
a large portion of our account in cash during a bull market in =
anticipation of a=20
break out or we could be fully invested and miss every breakout by three =
days,=20
after the sale settles.<SPAN style=3D"mso-spacerun: yes"> </SPAN>I =
guess the=20
main questions are:<SPAN style=3D"mso-spacerun: yes"> </SPAN>is =
this just an=20
Ameritrade internal policy as you suspected? <SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>Will other brokerages =
follow=20
suit?<SPAN style=3D"mso-spacerun: yes"> </SPAN>What do you -- and =
the other=20
<SPAN class=3DSpellE>canslimers</SPAN> -- think should be done about =
this onerous=20
restriction?<SPAN style=3D"mso-spacerun: yes"> </SPAN>Again, <SPAN =
class=3DGramE>Tom,</SPAN> thanks for all your help. <SPAN=20
style=3D"mso-spacerun: yes"> </SPAN>Jerome <SPAN=20
style=3D"mso-spacerun: yes"> </SPAN><SPAN=20
style=3D"mso-spacerun: yes"> </SPAN><SPAN=20
style=3D"mso-spacerun: =
yes"> </SPAN><o:p></o:p></SPAN></FONT></P></DIV></BODY></HTML>
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