By loaning out shares to short sellers, Fidelity is undermining its customers' holdings. One current example is Universal Display Corp. (PANL), where Fidelity has led in helping short sellers drive the value of PANL stock down to about half the price it should currently command. Although legal, this policy is unethical.
Clients may think twice about purchasing equities for their accounts knowing that Fidelity was going to attack their holdings -- this is bad business. Apparently the customer may not always come first!