Well, PSEC doesn't even know. I just called Fidelity and their best guess is that PSEC failed to realize that next Friday the markets are closed. As a result, they still have Friday listed as Record Date, and Wed the 27tg as the EX date on their web site.
Fidelity thinks they failed to realize the Friday Holiday and that the EX is moved forward to Tuesday the 26th. That means Monday will be X-1 and time to unload.
Well, here's the interesting thing about that.
FINRA defines the meaning of "record date," but doesn't give any rules for setting one. if you want to set your record date on Good Friday or a Sunday or just pin it to the end of the month, apparently you can. Ditto for the payable date.
FINRA does give rules for setting an ex-dividend date. You have to set it to the record date minus 2 business days if the div/distro is less than 25% of the security price*, and to the payable date plus one business day if the opposite is true. This works even if the ex-div or payable date is not a business day.
So PSEC shouldn't have to worry, here. Their ex date is legit.
* - Security price is the actual metric. I'm not sure how a registrar is supposed to know what the security price will be on the ex-date. But it's probably that way so the company doesn't have to come up with an accurate accounting of shareholder equity on the fly in the middle of a reporting cycle. And it must be down to the announcement date at that point. Once the ex-div date is set, it wouldn't be allowed to move even if the stock caused the criteria to switch sides. Imagine the war that would break out if you got to ex-div and a penny drop in the stock made the ex-div suddenly move after the payable date. And what would they do if it worked the other way, and you got to the payable date for a monster distro and the last tick took it under 25%, meaning ex-div was really weeks before? No, it has to be set in stone as of the announcement. That would be the ruling.
I don't know how I missed this before. I've only read this three times.
"(1) In respect to cash dividends or distributions, or stock dividends, and the issuance or distribution of warrants, which are less than 25% of the value of the subject security, if the definitive information is received sufficiently in advance of the record date, the date designated as the "ex-dividend date" shall be the second business day preceding the record date if the record date falls on a business day, or the third business day preceding the record date if the record date falls on a day designated by the Committee as a non-delivery date."
That's the actual text of FINRA rule 1140-b. I must have been getting some other link earlier. There's no way I missed a whole sentence. I also don't recall seing the "or stock dividends", which would have made totally clear something that was still a tiny bit ambiguous over on the TWO board. The universe is effing with me.
No dice...here it is from the groups ssa dot U no what web site:
"" There is another complication caused by weekends and holidays, and that is when the record date falls on a weekend or an exchange holiday. In such a case, the ex-date is sooner than it otherwise would have been. For example, if Friday is the record date, normally Wednesday would be the ex-date. But if Friday is an exchange holiday, the ex-date in that circumstance would be Tuesday. Record dates that fall on weekends are handled in a similar manner, but while a record date that falls on a Saturday would have an ex-date one day sooner than if it were on a weekday, a record date that falls on a Sunday would have an ex-date two days sooner than it otherwise would be. The purpose of advancing an ex-date in such circumstances is to assure that shareholders of record are established no later than the declared record date. The three day settlement rule still applies but because the exchanges are not open on holidays or weekends, the ex-date must be advanced for the trade settlement to be made before the record date, as the following Monday would be too late. It is not common that a record date falls on an exchange holiday or a weekend but it happens on occasion. The primary reason is that a few companies have a policy that the record date for their dividends will always be on the same date of the month in which they are paid, for example, the 15th. Of course the 15th (or any specific date) will not always fall on the same day of the week, so on occasion it will land on a Saturday or a Sunday. ""
Tuesday therefore, the 26th is EX date. Out on Monday my friends.
I just thought of something hilarious.
That 25% dividend rule must create a nightmare if the stock has any sort of day trading going on.
Think about it.
The check/shares/boxcar full of bovines are delivered on the pay date to the shareholder of record. The record date was weeks before, and T+3 settlement means that you can sell on R-2 and still be shareholder of record. So you receive the check, and you know you're not allowed to keep it. So you have to give it to the person you sold the stock to. But what if he flipped them an hour later? And so on and so on...for several weeks? Across several ECNs and markets and maybe through a couple of handshake transactions?
And nobody aggregates all of that information. Eventually the company's registrar will know who was the real last owner on the day before ex-div, the pay date, but that can take up to P+3 to determine.
That check is going to be in tatters by the time it reaches its true owner. And those cows are gonna be hungry.