Many people have questioned my last post regarding the upcoming BRCM stock split. Unfortunately, it seems; they did not either read my message nor the question I was answering.
Not to belabor this any further, the question was if one were to buy BRCM shares after the record date (2/5/99), what would happen to the newly bought shares. Again:
Often a split is announced long before the effective date of the split, along with the "record date." Shareholders of record on the record date will receive the split shares on the effective date (distribution date). Sometimes the split stock begins trading as "when issued" on or about the record date. The newspaper listing will show both the pre- split stock as well as the when-issued split stock with the suffix "wi."
For people who really are interested, here is what happens when a person buys between the day after the T-3 date to be holder of record, and the distribution date. Remember that the holder of record on the record date will get the stock dividend. And of course the price doesn't get adjusted until the distribution date. So let's cover the case where a trade occurs in between these dates.
1. The buyer pays the pre-split price, and the trade has a "Due Bill" attached. The due bill means the buyer is due the split shares when they are issued. Sometimes the buyer's confirmation slip will have "due bill" information on it.
2. In theory, on the distribution date, the split shares go to the holder of record, but that person has sold the shares to the buyer, and a due bill is attached to the sale.
3. So in theory, on the distribution date, the company delivers the split shares to the holder of record. But because of the due bill, the seller's broker delivers on the due bill, and delivers the seller's newly received split shares to the buyer's broker, who ultimately delivers them to the buyer.
In some cases, the company may request that its stock be traded at the post-split price during this interval, or the market itself might decide to list the post-split stock for trading. In such cases, the due bills themselves are traded, and are called "when issued" or for spin-off stock, "when distributed" stock. The stock symbol in the financial columns will show this with a "-wi" or "-wd" suffix.
BTW, the record date is for everyone who holds the stock, regardless if one holds the stock via a broker or is in possession of the actual stock certificate. Remember, the record date means the company examines its current list of owners to see who is a shareholder of record. To receive split shares and/or a dividend, you must be a shareholder of record, hence the term: record date.
For more information, invest-faq.com
Regards,
Pat
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