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Brokered CD: There Is A First Time For Everything

txFish1
  |     |   479 posts since 2023

Want to start off by saying I have had this brokerage account at one of the major brokers for 30 years and have bought many broker CD's and other assets with rarely an issue. Well when 5 year CD rates hit 5% back in December I bought a couple of new issues. One paid monthly and the other semi-annualy. They both showed up on my accounts page and the monthly pay has been paying every month but in late June when the first interest payment was due on the semi annual CD it did not show up. Waited 2 days to see if it would post and then called the brokerage and they said they would look into right away and get it resolved. Well they just got it resolved today which is 16 days past due! They were not very concise in their explanation but I gathered from talking to a manager at the local branch that the interest had gone to another customer at the broker. I still do not have a good explanation of how it occured but it sure made me think about all the CD buyers who told me over the years to buy directly from the Bank or Credit Union

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19


betaguy
  |     |   181 posts since 2022
what bank? what brokerage?
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txFish1
  |     |   479 posts since 2023
It was a Discover Bank 5 year broker CD. I really do not want to say which Brokerage it was as they have done a really good job for me over the years and I dont want to throw them under the bus but it did make realize what could happen if info was entered wrong by the Brokerage.
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3
Marfa
  |     |   68 posts since 2022
Thanks for the heads up!! I guess I better check my vanguard cds as many are from discover.
Btw a vanguard employee years ago sent my wire to a dead account and then both vanguard and the receiving bank said it was the others fault.
Then some other person told me he knew where the money went but couldn’t tell me where!!
It got resolved but it still has an impact on you
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4
MAKNYC
  |     |   324 posts since 2015
I am in no way questioning your experience, but this story violates every understanding I thought I had with brokerage firm operations (and I worked on Wall Street for my entire career). Absent additional relevant facts, I would’ve assumed the only way that what happened to you could happen was internal employee fraud at the brokerage firm. The CD in question would’ve had to be transferred out of your account and into another clients for the one day record date for the interest payment. But alas, there is apparently another way that I have not considered. Awaiting further color if you should get some. There is no reason the onus should be on the client to watch for this.
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9
Blade
  |     |   49 posts since 2018
Sorry to hear about your troubles. I have several brokered CD's with Vanguard and I've only had to contact them once when a monthly interest deposit failed to show up. They told me it was late because the bank issuing it to them (Wells Fargo) had not sent it over yet. It showed up a couple of days later but that was the first time I realized something like this could occur. Good luck with your resolution!
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3
planxy
  |     |   140 posts since 2013
Wells Fargo error. Why am I not surprised?
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betaguy
  |     |   181 posts since 2022
" talking to a manager at the local branch"
So, It was td ameritrade.
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txFish1
  |     |   479 posts since 2023
no was not TD Ameritrade. I am in a the Dallas TX area and we have TD, Schwab, Fidelity and Etrade along with others. As stated I did not want in any way to bash on the brokerage even though I am sure it was their fault. My impression is after talking to a few empolyees that the CD interest was paid on time by the bank but somehow ended up in another customers account but not 100% sure of that either. If I ever get a valid explanation from them I will certainly pass it on
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