Is there an increased risk of using CMA features at a brokerage that is not associated with a real bank (i.e. Fidelity or Vanguard)?
There have a number of anecdotes about fraud on Fidelity CMA accounts (or CMA accounts in general at brokerages). With Fidelity the biggest problem seems to be the layers of banks involved in processing transactions. You have UMB for the transactions, BNY Mellon for the debit card, and then often another partner bank for the deposit. When there's fraud, Fidelity points the finger at UMB (and UMB at Fidelity) but neither is in a major rush to figure things out. Eventually things likely get figured out, but after quite a bit of headache.
It seems (theoretically) safer to use a CMA at a brokerage like JP Morgan, Schwab, or Merrill where the brokerage is attached to an actual bank so that if there is an issue, that bank can solve it. Is that true, in reality?
The Synapse failure and multitude of Fintech issues have be rethinking where we keep our cash. It's not like Fidelity is a startup fintech, but it's not a stretch to imagine issues arising when you have multiple different parties involved in handling cash.
There have a number of anecdotes about fraud on Fidelity CMA accounts (or CMA accounts in general at brokerages). With Fidelity the biggest problem seems to be the layers of banks involved in processing transactions. You have UMB for the transactions, BNY Mellon for the debit card, and then often another partner bank for the deposit. When there's fraud, Fidelity points the finger at UMB (and UMB at Fidelity) but neither is in a major rush to figure things out. Eventually things likely get figured out, but after quite a bit of headache.
It seems (theoretically) safer to use a CMA at a brokerage like JP Morgan, Schwab, or Merrill where the brokerage is attached to an actual bank so that if there is an issue, that bank can solve it. Is that true, in reality?
The Synapse failure and multitude of Fintech issues have be rethinking where we keep our cash. It's not like Fidelity is a startup fintech, but it's not a stretch to imagine issues arising when you have multiple different parties involved in handling cash.
Statistics: Posted by NYCaviator — Mon Aug 26, 2024 8:39 am — Replies 2 — Views 192