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Author: tlpriest Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 737513  
Subject: Wachovia Date: 10/18/2003 10:45 AM
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I have a managed brokerage account at Wachovia Securities (formerly First Union Securities formerly Wheat First Securities formerly Wheat Securities when I started). I was balancing last month's statement with Quicken when I decided to read a note "Information about a change to your account agreement." I'll reproduce the startling part here:

"An important change made to your account agreement, as set forth below, authorizes Wachovia Securities, without any consent or action on your part, to establish a new "Default Cash Sweep Option" for your account and to move funds in your existing Cash Sweep Option to the new Default Cash Sweep Option. Another change clarifies the ability of Wachovia Securities to modify, change or eliminate any of the Cash Sweep Options.

Wachovia Securities and its affiliates may take into account their own business considerations and profitability in selecting Cash Sweep Options for your account and in changing the Default Cash Sweep Option for your account. Under the new terms of your account agreement, you expressly agree that Wachovia Securities does not have any fiduciary duty to you to act in your best financial interest as opposed to its own interest or to select Cash Sweep Options for your acount that are better for you than other available Cash Sweep Options or similar investments that are available in the market."


Did you get that! I pay a quarterly management fee for Wachovia to manage this account and they in turn ask me to agree they have no fiducitary responsibility to act in my best interest and can consider their own profit over mine when selecting how to invest my money! Adjectives like absurd, irresponsible, and illegal are flashing through my mind.

Wachovia should not be permitted to amend account agreements this way and disclaim fiduciary responsibility for something they are being paid to do - the precedent here is stunningly bad. Clearly, Wachovia will be losing my business next week, but are these terms legal? Seems like after sending a letter to my broker, I need to send one to the SEC or my Congressman. Thoughts?

Travis
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