PrefBlog

There’s a bit more gossip on the Rochdale Securities fiasco:

The president of Rochdale Securities said the firm was nearing a rescue deal Wednesday, and its star analyst told potential investors he planned to stay on board if the life line panned out, according to a person familiar with the talks.

When reached by phone Wednesday, firm President Daniel Crowley said he was close to finalizing a deal to bolster Rochdale’s balance sheet. He declined to comment further. The Stamford, Conn. brokerage, a relatively small stock-trading and research firm that serves only institutional clients and doesn’t trade its own money, is best known for employing prominent bank analyst Dick Bove.
…
The stock purchase allegedly took place Oct. 25, just ahead of Apple’s quarterly earnings release. Mr. Miller bought 1,000 times the number of Apple shares a client requested, the person familiar with the rescue talks said, making the trade worth roughly $1 billion. Rochdale had about $3.4 million in capital at the end of 2011, according to a filing with the Securities and Exchange Commission. After the purchase, the person familiar with the talks said, Mr. Miller shut down his computer and left the office. He hasn’t returned calls from firm executives since, according to this person.

Mr. Miller has said the trade was an accident, according to two people familiar with the transaction.

Recent softness in the equity market may well be related to capital gain realization:

President Barack Obama’s re-election means his administration will push to let tax cuts enacted during the George W. Bush era expire for high earners, as scheduled, at year-end. Obama wants to increase the top federal income tax rate to 39.6 percent from 35 percent, boost rates on long-term capital gains to as much as 23.8 percent, and shrink exemptions from estate-and-gift taxes.
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An investor who sells $100 of stock with a cost basis of $20 in 2012 would see proceeds — after capital gains taxes — of $88, according to an analysis by J.P. Morgan Private Bank. Next year, if Congress doesn’t act, earnings from the sale would drop to $80.96 if rates rise to 23.8 percent. That means the stock price would need to rise by at least 9 percent for an investor to be better off selling in 2013.

It was another mixed day for the Canadian preferred share market, with PerpetualPremiums up 11bp, FixedResets off 5bp and DeemedRetractibles gaining 1bp. Volatility was muted. Volume was average.

This entry was posted on Friday, November 9th, 2012 at 2:15 am and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.