Preferreds give up early gains as liquidity lightens ahead of holiday; American Realty up

By Stephanie N. Rotondo

Phoenix, Dec. 23 – The preferred stock market was modestly higher Tuesday but came in by the end of the trading session.

The early strength was attributed to a raging equity market, as the Dow Jones industrial average topped 18,000 for the first time.

The gains in the common equity market were spurred by a revised third-quarter gross domestic product number, which was increased to 5% from 3.9% reported last month.

On that news, “the long bond was getting smacked,” a trader said.

The Wells Fargo Hybrid and Preferred Securities index closed down 8 basis points, or 2 cents on average for $25-par preferreds. The index was up 2 bps at mid-morning.

Still, liquidity remained weak ahead of the holidays.

Associated Banc-Corp.’s 8% series B perpetual preferreds were assigned a new trading symbol on Tuesday, moving to “ASBPB” from “ASWPB” on the New York Stock Exchange.

The paper was trading at $27.45 early in the session but closed 3 cents higher at $27.48.

Meanwhile, American Realty Capital Properties Inc.’s 6.7% series F cumulative preferreds (Nasdaq: ARCPP) continued to regain ground following last week’s rout.

The paper ended the day at $21.57, up 26 cents. The shares were trading at $21.41 early in the day, up 11 cents.

In a lawsuit filed on Thursday, Lisa P. McAlister – formerly the chief accounting officer and one of two executives that lost their jobs in the wake of an accounting irregularity that surfaced in October – alleged that it was Nicholas Schorsch, co-founder and former chief executive officer, who ordered her and Brian Block, former chief financial officer, to alter second-quarter results in order to cover up an error made in the first quarter.

McAlister claims she had concerns about following through with the orders but that those concerns were ignored.

The company first announced the issue in late October and said that McAlister and Block had resigned.

McAlister is seeking $50 million in damages in her defamation suit, which was brought against Schorsch, CEO David Kay and the company itself.

On Dec. 15, the New York-based real estate investment trust said that Schorsch, Kay and Lisa Beeson, chief operating officer, were resigning their positions as well. The announcement did not give a specific reason for the departures.

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