Sector Update: Financial

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Financial stocks are broadly lower, with the NYSE Financial Sector Index sinking about 1.2% and the S&P Financial 100 Index retreating about 1.2%.

In company news, The First Marblehead Corporation ( FMD ) is down a split-adjusted 5.6% this afternoon at $7.53 a share, down 45 cents from its $7.98 opening price after completing a 10-for-1 reverse stock split just before the start of trading.

The reverse addresses a compliance issue raised by the New York Stock Exchange in late September after FMD shares had fallen under the $1 minimum average price requirement for an ongoing NYSE listing for more than 30 days.

The number of FMD shares were reduced by a factor of 10, with shareholders receiving one share of "new" FMD stock for every 10 shares they previously held. The market capitalization of the company was unchanged at around $850 million following the reverse split.

FMD share price plunged beginning in mid-August after the specialty lender said it expects the Internal Revenue Service will disallow some of the tax refunds the company previously received as well as counting trust residuals from its March 2099 sale of an investment vehicle that owned all 15 of the National Collegiate Student Loan Trusts the company had facilitated up to that time as taxable income. FMD estimated the adjustment could cost it about $300 million plus interest.

FMD is contesting the government's Notice of Proposed Adjustment.

In other sector news,

(+) KINS, (+2.5%) Announces plans for a public offering of 2.5 million shares of its common stock at a price yet to be determined. Proceeds are slated to fund growth of its insurance subsidiary, repaying debt as well as funding potential acquisitions.

(-) TAXI, (-8.7%) Launches underwritten offering of 2.9 million shares of its common stock. Net proceeds will be used to make loans and other investments with portfolio companies and other general corporate purposes.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: FMD

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