The 25% free trading share dividend
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 IBCX has announced Dec.1 as the record date and Dec.15 as the payable date, then the ex-date will be Dec.18, the first business day after the payable date. In this example, Dec.18 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 Dec.10, 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 Dec.10 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 Dec10; and secondly, as subsequently paid by the company to record date holders.
This Notice reminds member firms and their associated persons that ex-dates are determined differently, depending on the size of the distribution. Current and historical dividend information is maintained by The Nasdaq Stock Market and can be found on the Nasdaq Trader Web Site at www.nasdaqtrader.com/dailylist/dl_di_ind.stm.
Ex Date: 12/18/2006
Record Date:12/01/2006
Payment Date:12/15/2006
Due Bill Redeemable Date: 12/20/2006
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