Preferred Stock Investors About To Be Cash-Rich Thanks To New Fed

Coolidge Corner Theater, Brookline shot with Panasonic GH1 and stock 14-140 lens (Photo credit: soelin)

Beginning on July 11, 2012, and for the 90 days that follow, preferred stock investors are going to see a significant uptick in their brokerage cash account thanks to a Thursday, June 7, 2012 announcement by the Federal Reserve.

The June 7 Fed announcement opened the "premature call window" for 90 days, triggering a multitude of trust preferred stock (TRUPS) redemptions from our publicly traded banks[1]. With the premature call window now open (for the second time since July 2010), all bank-issued TRUPS are now redeemable regardless of the call date that is published in their prospectus.

Current Redemption Status

Companies are required to provide a minimum of 30 days notice when they redeem ("call") a preferred stock. SunTrust (STI) was the first to react on Monday, June 11, redeeming its STI-Z TRUPS for July 11, 2012. If you own shares of STI-Z, SunTrust is going to buy your shares back from you on that date, the proceeds showing up in your brokerage cash account. ... Continue to read.

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