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Thursday, March 18, 2010 1:02:41 PM
This is not a regular dividend. It is more than 25% of the pps and special rules apply. This does not happen often and there is much confusion when it does. Below is a FINRA link describing how the ex-date works and why it will be different on this particular stock.
Dividends Or Distributions
25 Percent Or Greater Than
Security Value
The second method, under
subparagraph (b)(2) of Rule 11140,
provides that for dividends or
distributions that are 25 percent or
greater of the value of the subject
security, the ex-date shall be the
first business day following the
payable date. For example, if an
issuer has announced August 10 as
the record date and August 31 as
the payable date, then the ex-date
will be September 1, the first
business day after the payable
date. In this example, September 1
is the day on or after which a buyer
would purchase the security without
the dividend and, therefore, the day
on which the price of the stock is
adjusted downward. In this
example, a seller of the security on
August 15, even though the holder
of record to receive the dividend,
would have to relinquish the
dividend to the buyer. Indeed,
because the value of the security
on August 15 has not yet been
adjusted downward to reflect the
dividend distribution, the seller in
this example would be unjustly
enriched by keeping the dividend.
The seller would have received the
value of the dividend twice: first, as
fully reflected in the unadjusted
price of the stock on August 15;
and secondly, as subsequently paid
by the company to record date
holders.
http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p003997.pdf
Have only seen this happen a couple times and creates lots of confusion.
trade
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