My Beef With My Broker

This month, I’m sharing the story of how more than $32,000 disappeared from my E*Trade brokerage account last May and made its way to the Dutch Ministry of Finance in the Netherlands. It’s a cautionary tale about the perils of investing in a foreign stock and the frustrations of dealing with a fully automated online broker. I’ll share some blame, too, for not delving into the fine print about stock tenders.

A tender tale. In 2015, I bought 500 shares of Mobileye, an Israeli company that developed camera-based driver-assistance technology. We highlighted the stock in our April 2015 issue in Stocks to Cash In on World-Changing Trends (see our updated version of stock picks that will benefit from long-term trends). In March 2017, Intel offered to acquire Mobileye at a nice premium, and the share price shot up. I decided to sit on my shares and wait for the buyout money.

In May 2018, I noticed a sizable drop in the value of my account. I logged on and saw a placeholder CUSIP number for the now missing Mobileye shares, but I expected the cash to appear within a couple of days. That’s what had happened previously with shares I owned in companies that had been acquired. But a couple of weeks later, the money was still missing. I contacted E*Trade to see what was happening.

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As it turned out, I missed the period to tender my shares (I’ll explain why below). All my untendered shares were transferred to a subsidiary of Intel, and the money representing those shares was transferred to an escrow account in the Netherlands. To claim my money, I had to submit a long form that, among other things, stated that I was not subject to Israeli taxes. That was last August. Over the next several months, I e-mailed E*Trade several times for updates. No money yet, I was told each time.

The letter. Fast-forward to late January. This time I decided to call. The rep on my “dedicated elite team” transferred me to the corporate action department. The employee who picked up there said he didn’t have any information. He did not offer to investigate further. He seemed indifferent and unresponsive. When I asked where I could write to lodge a complaint, he gave me the general e-mail address. No dice, I said, I want to write a letter. He gave me a post office box (with no specific name) in Jersey City, N.J.

If you ever want to complain, write a letter to the company’s CEO or president (or take to Twitter). I checked the E*Trade website for the name of the CEO and found his e-mail address in an online search. In my two-page letter to CEO Karl Roessner, I pointed out that the sensitive and urgent Mobileye tender information was delivered only via “Smart Alerts,” which seemed to be a tool to help evaluate securities. Why not send these messages to my e-mail address, where I get my statements, or (gasp) send me a notice via snail mail?

I e-mailed the letter at 4 o’clock on a Wednesday afternoon. At 4:20, I got a call from a “corporate support manager,” who assured me Mr. Roessner had received the letter and wanted him to investigate. In follow-up calls, I learned that other E*Trade customers who had not tendered shares were just starting to see the money hit their accounts. (I never mentioned my position as editor of this magazine, nor used Kiplinger letterhead or my company e-mail address.)

What I learned from my merry-go-round ride is that investing in foreign securities can be a pain. I will not owe Israeli taxes on my Mobileye profits, but there’s a good chance that if you invest in an international fund or stock that pays dividends, you will pay foreign taxes (we explain how to recoup those taxes). I also learned that I was naïve to believe that a large, impersonal brokerage would give me personalized service, and I think that’s true for an entire industry that has replaced human brokers with cheap, automated trades. (I now have alerts forwarded to my e-mail address.) Finally, strategic complaining works. Over the past few weeks, the updates have continued. The last one confirmed that my money will soon be heading back to the U.S.