what was the POINT of telling people to buy shares in the retail marketplace ON OR BEFORE MAY 20th (May 17th)?
The answer to that question is THE key. I will suggest to you one possible and plausible scenario, just an opinion.
If this were my company and I knew that the nature of the spinoff would require SEC/NASD oversight and thus delays in the actual dividend distribution, I would consider the following:
1. Telling shareholders of this delay would absolutely place significant and immediate downward pressure on the stock price. Delays in the occurrence of expected events are far worse than not announcing any future events. Many view any delay as a welch, crazy but true.
2. I would feel more comfortable about the stock price if I could establish a more concentrated buying base at higher price levels. The greater the level of buying at those higher levels, the less the jolt downward when the delays are brought to light. A theory which last week's activity has clearly disproved.
3. To achieve 2. above, I would attempt to provide a compelling reason as to why buying needs to occur soon. By making a statement that says: "Shareholders of record as of May 20, 1999 are entitled to spinoff shares of TIPS", a sense of urgency to buy is conveyed...EVEN THOUGH NOTHING IN THAT STATEMENT INDICATES THAT EARLY BUYING IS A NECESSARY OR SUFFICIENT CONDITION FOR SPINOFF ENTITLEMENT.
By not including additional text such as: "provided that those shareholders of record on May 20,1999 still own stock after the bell on the day preceding the ex dividend date, a date which has not yet been determined" or "failure to buy the stock prior to May 20(May 17) will not prevent receipt of the dividend as long as shares are purchased prior to the, as yet undetermined, ex dividend date", investors were thus denied access to the complete story and thus unable to make a more reasoned investment decision.
Did the Company do anything wrong by not referring to the ex dividend date as THE key milestone? Legally? Probably not. Ethically? I leave it to individual morals to decide.
In the final analysis, once the news was fully disclosed, the stock was hammered down anyways. Had the news been complete, up front, would it have made a difference? Maybe, maybe not. But I am sure investor confidence would not have been shaken to the extent it has been.
Was this the rationale for stressing date of record and ignoring ex dividend date? Again, I leave it to you to decide.
The above is just one possible explanation.
TG
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