Fairfax India Trading Block

[FairFacts]

I tried to add some FFXDF in my IRA account at Fidelity today (I have been accumulating small purchases regularly without any issue).

Today however, Fidelity gave an error message

"Error (146834) Securities flagged as Rule 144A cannot be traded through this electronic channel".

 

I called Fidelity who told me that I can only issue sell order and only through their desk (not electronically). They said it is because Fairfax India has not complied with all SEC filings therefore they will not allow any further purchases.

 

Anyone else seeing this??

 

 

[WideMoat]

Yes, same.

[FairFacts]

I emailed investor relations about this and here is their reply

 

"Thank you for your email.

Fairfax India Holdings Corporation has been listed on the Toronto Stock Exchange in US dollars under the symbol FIH.U since it's inception year end 2014. The company files all required news releases, financial reports and other disclosures only under the SEDAR system in Canada as required by the Ontario Securities Commission.

The Company does not market or disseminate information in the United States or through the SEC.

The Company has not created or supported any other listings beside the FIH.U symbol on the TSX."

 

 

Not sure where this leaves us.

 

[eclecticvalue]

Parsad, is there a possibility you can talk with Fairfax for getting current with the SEC so U.S. shareholders can buy ffxdf again? or if anyone is going to the annual meeting, Can someone bring it up?

[rohitc99]

I emailed investor relations about this and here is their reply

 

"Thank you for your email.

Fairfax India Holdings Corporation has been listed on the Toronto Stock Exchange in US dollars under the symbol FIH.U since it's inception year end 2014. The company files all required news releases, financial reports and other disclosures only under the SEDAR system in Canada as required by the Ontario Securities Commission.

The Company does not market or disseminate information in the United States or through the SEC.

The Company has not created or supported any other listings beside the FIH.U symbol on the TSX."

 

Not sure where this leaves us.

 

i am facing the same issue. how did this work till now if it was listed only on TSX

[gfp]

Fairfax has nothing to do with it guys.  Here is a primer on unsponsored ADRs

https://www.investopedia.com/terms/u/unsponsoredadr.asp

[Jurgis]

Fairfax has nothing to do with it guys.  Here is a primer on unsponsored ADRs

https://www.investopedia.com/terms/u/unsponsoredadr.asp

 

I don't see how you link explains the change in brokers not allowing to trade Fairfax India anymore.

[DooDiligence]

Fairfax has nothing to do with it guys.  Here is a primer on unsponsored ADRs

https://www.investopedia.com/terms/u/unsponsoredadr.asp

 

I don't see how you link explains the change in brokers not allowing to trade Fairfax India anymore.

 

It doesn't.

 

It does however explain why Fairfax is not the right organization to contact regarding this matter.

 

The ADR's are unsponsored.

[Jurgis]

Fairfax has nothing to do with it guys.  Here is a primer on unsponsored ADRs

https://www.investopedia.com/terms/u/unsponsoredadr.asp

 

I don't see how you link explains the change in brokers not allowing to trade Fairfax India anymore.

 

It doesn't.

 

It does however explain why Fairfax is not the right organization to contact regarding this matter.

 

The ADR's are unsponsored.

 

Yes, and?

 

Not all unsponsored ADRs are prohibited from trading by brokers.

 

I'm pretty sure the line drawn is based on what the company issuing shares does (in this case Fairfax India) rather than what the unsponsored ADR issuer does.

 

BTW, from the posts in thread it appears that brokers prohibit buying Canadian listed shares of Fairfax India too. These are not ADRs. And again the responsibility for lifting the prohibition lies with the issuer: Fairfax India.

Edit: actually I reread the thread and it's not clear whether buying FIH.U (rather than FFXDF) is blocked or not. So I'm scratching my last paragraph.

[eclecticvalue]

Jurgis- Right now, you can't buy FFXDF if you reside in the United States. However, you can buy FIH.U . You have to open an extra account with Fidelity.

[Jurgis]

Jurgis- Right now, you can't buy FFXDF if you reside in the United States. However, you can buy FIH.U . You have to open an extra account with Fidelity.

 

Thanks. My edit was correct then.  8)

[My Own Personal Hedge Fun]

Curious if anyone knows more about this? I am blocked even for sell transactions (and frankly, I'd like to reduce this position). It's unusual to be blocked for sell orders. I would try selling directly on the Toronto exchange, but Fidelity doesn't allow International trading for IRAs.

[tradevestor]

I tested by placing a limit order at a high price (I don't intend to sell now) and it said to call Fidelity representative.  Did you try calling them?

[vinod1]

Not related to trading limitations but isn't Fairfax India considered PFIC? I never looked into it because of that.

 

Thanks

 

Vinod

[Jurgis]

Not related to trading limitations but isn't Fairfax India considered PFIC? I never looked into it because of that.

 

Thanks

 

Vinod

 

Sure it's very likely PFIC. Only matters if you hold it in taxable accounts. Does not matter if you hold it in IRA.

[vinod1]

Not related to trading limitations but isn't Fairfax India considered PFIC? I never looked into it because of that.

 

Thanks

 

Vinod

 

Sure it's very likely PFIC. Only matters if you hold it in taxable accounts. Does not matter if you hold it in IRA.

 

Thanks! Did not know that. I tried to read up on this but not many links other than an EY document. I would research this  more. Do you think it is a pretty straightforward one that it is not taxable in a 401k or a Rollover IRA?

 

Vinod

[Jurgis]

Not related to trading limitations but isn't Fairfax India considered PFIC? I never looked into it because of that.

 

Thanks

 

Vinod

 

Sure it's very likely PFIC. Only matters if you hold it in taxable accounts. Does not matter if you hold it in IRA.

 

Thanks! Did not know that. I tried to read up on this but not many links other than an EY document. I would research this  more. Do you think it is a pretty straightforward one that it is not taxable in a 401k or a Rollover IRA?

 

Vinod

 

I believe that PFICs are not an issue in IRAs and likely 401(k)s.

But I'm not a tax professional. I am just random guy on the Internet. Please verify this with real tax professional.

[My Own Personal Hedge Fun]

From https://www.irs.gov/instructions/i8621

 

"Passive Foreign Investment Corporation (PFIC)

 

Generally, a U.S. person that is a direct or indirect shareholder of a PFIC must file Form 8621 for each tax year....

 

...However, a U.S. person that owns stock of a PFIC through a tax-exempt organization or account described in the list below is not treated as a shareholder of the PFIC.

 

An organization or an account that is exempt from tax under section 501(a) because it is described in section 501©, 501(d), or 401(a).

A state college or university described in section 511(a)(2)(B).

A plan described in section 403(b) or 457(b).

An individual retirement plan or annuity as defined in section 7701(a)(37).

A qualified tuition program described in section 529 or 530.

A qualified ABLE program described in section 529A."

[My Own Personal Hedge Fun]

I tested by placing a limit order at a high price (I don't intend to sell now) and it said to call Fidelity representative.  Did you try calling them?

 

I did last year, but got someone who wasn't interested in really finding an answer, probably because I phrased my question as a theoretical "what happens if I want to sell?" I figured it would be a temporary issue, so I didn't push much either.

[vinod1]

Jurgis & MOPHF,

 

Thanks for the info.

 

So it looks like neither 401k or an IRA is directly mentioned by IRS as being exempted. I will post if I find any confirmation.

 

Vinod

[Jurgis]

Jurgis & MOPHF,

 

Thanks for the info.

 

So it looks like neither 401k or an IRA is directly mentioned by IRS as being exempted. I will post if I find any confirmation.

 

Vinod

 

There is this thread and some reports/links in it:

 

https://www.cornerofberkshireandfairfax.ca/forum/general-discussion/pfic-classification-for-us-investors/msg260920/#msg260920

 

It's possibly not definitive though.

FWIW.

[TwoCitiesCapital]

I've previously posted links from one of the big 4 auditing firms as well as clarification from the IRS itself that imply retirement accounts are not included in PFIC reporting/tax guidelines.

 

That being said, I can't find the posts to give you the direct links.

[My Own Personal Hedge Fun]

Just tried again with both Fairfax and Fairfax India and online orders are allowed again. Suspected with the updated annual report that the situation might have changed.

 

Of course, not so sure I want to buy or sell. Unfortunately, feel like this one is not something I understand well enough, which is a good argument for selling.