Fidelity buyback may lead to restructuring

Fidelity Investments has bought back preferred shares from stockholders, possibly paving the way for a new ownership structure that would decrease corporate income taxes, published reports said. Stockholders have traded their preferred stock for cash and long-term notes, a spokeswoman said to the Associated Press. The move is a repeat of an exchange Fidelity shareholders made six months ago, when they switched out of preferred stock in exchange for $1.17 billion of non-voting common stock and $2.59 billion in 30-year notes and cash, a Fidelity spokeswoman told Reuters. The shareholder exchanges have fueled speculations that Fidelity is looking to change its ownership structure, striving for a federal “S corporation” tax status, the AP said. This status would require the Boston-based mutual fund company to have 100 shareholders at most. An S corporation isn’t taxed on a corporate level. Rather income goes directly to investors, who pay taxes individually.