glennwhiteside (23.05)

Trustee Risk for Royalty Trusts?

February 25, 2009 – Comments (4) | RELATED TICKERS: PBT , BAC

The Permian Basin Royalty Trust just recently dropped from its $12-15 range to $7.50-9.  The big news is they cut their dividend in half.  Most people invest in these trusts for the fat dividends so it should be no surprise that the unit price suffered in reaction to the news.  But then there was another leg down, and I have begun to suspect there is nervousness that the trustee, which is BAC, could be taken over by the FDIC.  I confess I don't know the mechanics of how these things work which is why I ask -- what happens to the money in an express trust when the trustee fails?  [more]