Grifco Inc (GFCI)

[jtomm]

Dividend Announcement Invalid, in my opinion.

Here's my take on it.

I think the confusion here comes from unintentionally taking things out of context.

Lawyers often write things in very confusing language. (The more confusing, the more chance for additional billable hours down the road!)

They often write stuff that must be taken in its entirety, which is not always easy because a "whereas" from page 4 might apply to something on page 7.

-In this case, the law is talking about how to give notice for three different possible actions:

1) dividends or distributions
2) splits or reverse splits
3) rights or other subscription offerings

Let's shorten those to dividends, splits, and offerings.

The law is not saying that all three are the same or are treated the same. A dividend is not an offering. A split is not an offering.

Some of the paragraphs do not apply to all three actions, others do. And other paragraphs specifically delineate that things are different for 1, 2, or 3.

Consider a different example that might help explain.

If I say, "the following law applies to these actions:"

1) walking
2) running
3) sleeping

And then the law goes on to say, "the above actions must be done while wearing shoes, or in the case of sleeping, while lying on a bed."

That sentence is a somewhat confusing way of saying that you must wear shoes while doing 1 and 2, but must be lying on a bed while doing 3. It does not mean that walking must be done while lying on a bed, or that you must wear shoes to bed. Nor does it mean that you will be following the law if you sleep on the ground while wearing shoes. It's saying that the rules are totally different for number 3.

-That's sort of how this record date law is written. If you re-read the entire law from start to finish in that light, I think it will make sense.

The part of the paragraph you're focusing on singles out offerings as being handled differently from dividends and splits. "10 days prior to the record date" is what applies to dividends and splits; the exception applies only to offerings. That part does not apply to Grifco because Grifco is doing a dividend, not an offering.

Read it all in context and take particular note of this paragraph:

"iv. Date of payment or distribution or, in the case of a stock or reverse split or rights or other subscription offering, the date of delivery"

That paragraph clearly applies to all three actions and is not optional for any of the actions. "Date of payment or distribution" applies to action 1 (dividends), "date of delivery" applies to 2 and 3 (splits and offerings).

http://www.law.uc.edu/CCL/34ActRls/rule10b-17.html

-The bottom line, as I read it, is that if you're doing a dividend or distribution, you must announce the payment date 10 days before the record date.

Grifco has never announced a payment date . . . . . and the record date has long passed.

-And on a separate note, since this would probably be considered a 25% or greater dividend or distribution by the NASD, the rule is that the ex-div date is the day after the payment date. But since at this time there is no payment date, then there probably is no ex-div date, regardless of what the company says. Because again, the NASD determines ex-div dates. Company press releases do not.

A dividend announcement without a payment date is not a dividend announcement.

It's basically . . . nothing.

It's a press release that makes it seem like something has occurred, but in reality nothing has.

It does, however, stir up a lot of excitement and make the price go up for a short period of time.