"I held BAX till June 18, I didn't get the special dividend."
You didn't get it because you sold before the ex-date of July 2. With spinoffs the ex-date is not two days before the record date, but one day after the distribution date. That's why BAX cautioned shareholders in its June 5 press release, "Holders of Baxter common stock are encouraged to consult with their financial advisor regarding the specific implications of selling Baxter common stock on or before the distribution date."
"the fine details at least in this case don't matter"
Sure they do. Any shareholder of record on July 21 who sells before the ex-date of Aug 13 has to forward the dividend to the buyer. That's hardly a minor detail.
...And look at me -- I screwed up too! If this dividend followed normal dividend date rules, which it doesn't, the "deadline" as you call it (the last day to buy and get the dividend) would've been July 16, not the 17th, as I misstated, and not the 21st, as you misstated.
Oh, dopey me!
"7/21/15 deadline. Payment 8/15/15. Dividend .50 cents ... this is my understanding"
No, actually that's your misunderstanding. July 21 is the record date. If this dividend followed normal dividend date rules, which it doesn't, the "deadline" as you call it (the last day to buy and get the dividend) would've been July 17, not the 21st. But that misunderstanding is irrelevant, because this dividend doesn't follow normal dividend rules. The ex-date is Aug 13, making the "deadline" Aug 12. And the payment date is Aug 12, not the 15th.
But you got the amount right!
You should be bummed out over your broker's explanation because you've been misinformed. You might want to call your broker back and ask why he thinks you have to buy before the record date when the ex-date is July 20.
Anyway, why would you want to buy EBAY just to get the PayPal spinoff when you can already buy PayPal in the when-issued market? It started trading there yesterday.
"Evidently FINRA is giving this dividend an exemption to its rules."
No, it's not an exemption of any rule; it has specific rules for distributions of this size.
"Of course, FINRA doesn't appear to publish what the the criteria for an exemption are."
Yes, it does. The rules are easily available on their website.
If only you'd take your own advice. Many special dividends, 25% or not, do NOT have the ex-date after the distribution date. But go ahead and keep believing that they all do and see where it gets ya.
"Please help me understand this"
"I've been researching how this works but still am unclear"
Well, it's confusing. These cases don't work anything like normal dividends ... except for the ex-dividend date serving the same purpose in both cases.
"to receive this special dividend of over 25%, I need to have bought it before July 21st (date of record)"
No. Like any dividend, you need to buy it before the ex-date. The ex-date is Aug 13. So you need to buy it on Aug 12 or earlier.
"and I must hold it until Aug 13 (ex date)"
Yes. No matter when you bought it, to get the dividend you have to hold it to the ex-date, which is Aug 13.
"Are these dates as openings or closings?"
You have to buy before the close of extended hours trading on the 12th and you have to hold until the open of premarket trading on the 13th. Of course you can buy any day before the 13th and sell any day after the 13th.
That all is the easy part. It gets much more complicated. All shareholders of record on the record date of the July 21st will be paid the dividend on August 12. But any shareholder of record who sells ENZN before Aug 13th will be obligated to forward the dividend to the buyer. (That's why you can buy as late as Aug 12 and get the dividend.)
Keeping in mind that to become a shareholder of record on July 21st, you would have to buy the stock no later than July 16, anyone who buys the stock from July 17 through Aug 12 and holds until at least Aug 13 will not be paid the dividend on Aug 12 (remember, it first goes to the shareholders of record as of July 21) because it will need to be forwarded to them from whoever they bought the stock from. So instead of Aug 12, the payment date for those who buy between July 17 and Aug 12 is Aug 17. (But in reality it can often take a few days longer, because all brokers aren't as timely as some.)
"Look at the last (2) Div payouts"
"stock did not drop at all"
Sure it did. For the previous dividend, the stock went ex by ten cents on Jan 8 2015. On Jan 7 it closed at 1.08; on Jan 8 it opened at 1.05. Not the full ten cent repricing, but rarely does a stock open at exactly the previous close minus the dividend. Only the outstanding orders are reduced by exactly the amount of a dividend; all stocks are free to open at any price on the ex-date. With the normal trading range of the stock being several cents, it's not unusual for it to not have corrected the full dime.
For the dividend before that, the stock went ex by 45 cents on Dec 24, 2013. On Dec 23 it closed at 1.60; on Dec 24 it opened at 1.28. Again not the full amount of the dividend, but close. Certainly far more than the normal trading range of the stock.
So your premise is wrong from the very start. It DID drop for each of the previous two dividends. And it will for this one too. Perhaps you were looking at the stock price on the record dates or the payment dates. Stocks react to dividends on the ex-dividend date, not the other two.
"I think you've got the ex-div date wrong."
No, he doesn't.
"Probably should be July 17th"
No, that would be the ex-date if normal dividend rules applied. In this case, they do not.
"Of course if it was Aug 13, there would be an opportunity to make a boatload of money."
The rules for distributions amounting to 25% or more of a stock's price are different than for normal dividends. In this case the ex-date is indeed August 13, and no there is no "opportunity to make a boatload of money." The due bill process rules that out.
"So if I sold my ebay stock during July 8 ~~ July 17th, at the full price, I will still get the equal share of PayPal stocks after July 17 ?"
No. During that time EBAY stock will trade with due bills attached that obligate the seller to forward the distribution to the buyer.
"The distribution date should have no bearing."
Actually is does. With stock splits or spinoffs, different distribution rules apply. In such cases the distribution date determines the ex-date, while with regular dividends the record date determines the ex-date.
"The stock should trade ex div after the record date not distribution date."
No, the ex-date in this case is the first business day after the distribution date. (And by the way, were this a normal cash dividend, the ex-date would've been two days before the record date, not one day after it. Only with mutual funds is the ex-date the day after the record date; never with individual stocks.)
"What would happen if you bought DD after 6/23 but before 7/1 or sold after 6/23 but before 7/1?"
Such transactions are made with due bills attached and the due bill process makes sure the distribution goes to the rightful owner.
Tomorrow is the day for the distribution of the spinoff shares, but Bax continues to trade with BXLT attached throughout tomorrow. July 2 is the ex-distribution date, the first day BAX will trade without BLXT attached, so tomorrow shouldn't be much different from today or yesterday.
"Force the brokers to do their jobs and submitt "DUE BILL" to those that got dividends that sold July 12th"
July 12 is over a week away. In any case, a broker can't simply "submit a due bill" after the fact. If the stock was using the due bill procedure, then all shares sold beginning two business days before the record date through the distribution date would have traded with due bills attached. If there were no due bills attached during that period, then the broker is right -- the ex-date wasn't the day following the distribution date, and if that is the case, due bills cannot be attached retroactively.
Does your trade confirmation say "traded with due bills" or something similar? If not, then your broker's right.
"TD is treating FUTL as a cash dividend instead of a "Special Dividend""
Not all special dividends have the ex-date after the record date, regardless of whether the special dividend is cash, stock, rights or warrants. In fact, many special dividends use an ex-date two days prior to the record date, just like normal dividends. If the special dividend is relatively small in comparison to the stock price, if it is conditional upon certain circumstances being satisfied after the record date, or if it involves restricted stock, then the ex-date for a special dividend is before the record date, not after.
"Since the dividend is not from earnings but from a windfall, I'm theorizing stock price will not fall on July 1."
The source of a dividend has no bearing on the repricing of a stock on its ex-distribution date. FINRA's open order repricing rule WILL be in effect.
"A little clarification. You have to be an owner of ebay stock by the end of the July 8th trading day to get the 1/1 share of paypal."
No. Ebay will distribute the shares of PayPal to all owners of record as of July 8, but that's not what determines who ultimately gets the spinoff. The ex-date for the spinoff is July 20, so anyone who buys the stock before July 20 and holds until that day gets the spinoff. That means you can buy as late as July 17 and receive the distribution. But all shares of Ebay stock traded from July 6th through July 17 will have due bills attached obligating the seller to forward the spinoff distribution to the buyers.
The due bill process is handled entirely by the brokers; Ebay has no role in the process, so its statement that it will pay the distribution to all shareholders of record as of July 8 is entirely accurate, though incomplete. That's why the company said in its June 26 press release, "eBay stockholders who hold common stock on the record date and decide to sell any of their common stock before the distribution date should consult with their stockbroker, bank or other nominee to understand whether the shares of eBay common stock will be sold with or without the entitlement to PayPal common stock pursuant to the distribution."
If sold the regular way, under the symbol EBAY, before the ex-date of July 20, the seller will also be selling his right to the spinoff, as the buyer will be buying that right. If sold in the ex-distribution market before the ex-date of July 20, under the symbol EBAY-WI, the seller retains the right to the spinoff, but will receive significantly less per share for the sale.
This is all standard procedure; nothing unusual about it.
"But what happens to the ebay share price ? Will it drop reflecting that the value of the paypal assets are separate?"
"If say Paypal was half the value would Ebay sh price drop to $30?"
Yes. PayPal will start trading on a when-issued basis on July 6, two weeks before the spinoff is effected. That will establish the fair market value and its closing price on July 17 will be deducted from the price of Ebay.