Big Dogs Status Quo
Two stocks have changed their stock status recently. The first and most straightforward stock update is BASF’s 2-to-1 stock split. The market has been tough but not enough to slice 50 percent off BASF. And as noted previously, the company is one of a number of large foreign-based firms that have delisted from the US exchanges because of the difficulties in maintaining US accounting standards as well as EU standards.
This is likely why more stocks listed in London than New York last year. Our parochial rules and our inability to grasp the global nature of the marketplace will continue to punish individual investors, not the multination brokerages and banks.
On that note, the second stock problem in the US is NEC, which had delisted once, relisted some American Depositary Receipts (ADR), then got embroiled in a minor scandal, and decided not to fight the Securities and Exchange Commission (SEC) but, at the same time, not cooperate either. The SEC then moved on the company’s US-listed shares, and the ADRs have been eliminated.
I haven’t written about the status of US shares for odd lot (non-1,000-share increments) because NEC wasn’t saying anything and the people at Bank of New York, where the ADRs were held, weren’t quite sure what was happening.
Round-lot shareholders can have their shares converted to the Tokyo-traded shares; call your broker, and he or she should get it done for you. For you odd-lot investors, here’s the scoop: Investor relations at NEC indicated that, by Japanese regulation, fractional shares won’t be issued for the ADR securities.
Representatives at the Bank of New York stated that US shareholders should contact their brokers to transact the exchange, which would involve an ADR cancellation. Investors would retain any leftover shares. If trading restarts, they could sell their position; if the ADR program is ultimately canceled, shareholders would receive $5.25 per share. Of course, this is still up in the air.
One way or another, NEC will sort out this complicated move back to Japan. But it’s not going to abscond with your funds, but if you hold odd lot shares, it may take a while to get to your funds.
This is likely why more stocks listed in London than New York last year. Our parochial rules and our inability to grasp the global nature of the marketplace will continue to punish individual investors, not the multination brokerages and banks.
On that note, the second stock problem in the US is NEC, which had delisted once, relisted some American Depositary Receipts (ADR), then got embroiled in a minor scandal, and decided not to fight the Securities and Exchange Commission (SEC) but, at the same time, not cooperate either. The SEC then moved on the company’s US-listed shares, and the ADRs have been eliminated.
I haven’t written about the status of US shares for odd lot (non-1,000-share increments) because NEC wasn’t saying anything and the people at Bank of New York, where the ADRs were held, weren’t quite sure what was happening.
Round-lot shareholders can have their shares converted to the Tokyo-traded shares; call your broker, and he or she should get it done for you. For you odd-lot investors, here’s the scoop: Investor relations at NEC indicated that, by Japanese regulation, fractional shares won’t be issued for the ADR securities.
Representatives at the Bank of New York stated that US shareholders should contact their brokers to transact the exchange, which would involve an ADR cancellation. Investors would retain any leftover shares. If trading restarts, they could sell their position; if the ADR program is ultimately canceled, shareholders would receive $5.25 per share. Of course, this is still up in the air.
One way or another, NEC will sort out this complicated move back to Japan. But it’s not going to abscond with your funds, but if you hold odd lot shares, it may take a while to get to your funds.
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