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Overstock.com, the retail giant firm, has just announced that it will be paying dividends to its shareholders in digital shares powered by an affiliate company, tZero. The CEO has expressed commitment to a blockchain capital market.
Overstock, the American retail firm, has announced on Tuesday the 30th that it will be paying stock dividends to its many shareholders using digital shares powered by its subsidiary, tZero. The decision to do this was unanimously agreed upon by the firm’s board of directors declaring that these dividends will be paid in shares of its Digital Voting Series A-1 Preferred Stock.
According to the announcement, the distribution date for the payments is set for the 15th of November 2019, at a 1:10 ratio. This means that at the record date, set for the 23rd of September, dividends will be paid by allocating 1 share of Series A-1 to 10 shares of the common stock. This will be applicable to any of the 40,000 Overstock shareholders controlling about 37 million shares from the firm.
Overstock.com CEO, Patrick M. Byrne, has explained that “the bundle of legal rights represented by each of these new A-1 shares is similar to the bundle of legal rights embodied in shares of our common stock (OSTK) that trades on NASDAQ.”
Furthermore, Overstock also announced that any holders of current Series A-1 shares can trade them on the PRO Securities Alternative Trading System (ATS) which runs on tZero’s Blockchain. This will, however, have to be done through brokerage accounts handled by Dinosaur Financial Group, because the digital shares are not registered under the 1933 Securities Act. Clearing and custody will be handled by a registered broker-dealer, Electronic Transaction Clearing, and Computershare is named by the announcement, as the official transfer agent.
The CEO has also added that there’s no exact way to tell how the digital assets paid will perform “in rough approximation” when compared with common stock. This could, however, be a pointer for traders to the possibility of arbitrage:
“Perhaps, arbitrageurs will notice and explore such matters, and in the process, punch a wormhole between the universe of legacy NMS and new universe of a blockchain capital market.”
Byrne has also expressed some satisfaction with the firm’s effort towards the actualization of a blockchain capital market, especially one that challenges popularly known traditional methods. He said:
“Five years ago, we set out to create a parallel universe: a legal, blockchain-based capital market. We’ve succeeded.”
The announcement nonetheless includes an investor notice from Overstock, warning customers about the many dangers of trading including liquidity risks as well as the fact that there are no guarantees.
“Investors should note that trading in digital securities could involve substantial risks, including no guarantee of returns, costs as selling and purchasing, no assurance of liquidity which could impact the price and ability to sell, and possible loss of principal invested.”
It further also adds a reminder that information is fleeting and is prone to change.
“All information is subject to possible correction. Information may quickly become unreliable for various reasons, including changes in market conditions or economic circumstances.”