News Release: SEC Must Stand Up to Industry Attacks and Re-Propose Buybacks Rule


Dec. 4, 2023

Carter Dougherty

SEC Must Stand Up to Industry Attacks and Re-Propose Buybacks Rule

Washington, D.C. The Securities and Exchange Commission should re-propose its rule on disclosures of stock buybacks as soon as possible now that the unreasonably tight deadline for a court-mandated revision of the rule has passed.

“The SEC should move quickly to ensure that corporate special interests do not win by weaponizing a notoriously industry-aligned part of the judiciary,” said Natalia Renta, senior policy counsel for corporate governance and power at Americans for Financial Reform Education Fund.  “Without timely and robust disclosure, investors cannot assess whether money spent on stock buybacks would be better spent on investments needed for long-term growth and viability of the company, like research and development, worker safety, wages, and consumer protection.”

The Fifth Circuit Court of Appeals, alleging “defects” in a rule designed to bring transparency to stock buybacks, gave the SEC 30 days to revise the rule – an impossibly short time frame it then refused to extend upon the SEC’s request. The ruling came in response to a lawsuit by the Chamber of Commerce.

In 2022, S&P 500 corporations set a new record at $922.7 billion in stock buybacks. But absent effective regulation, investors have no idea whether or not buybacks corresponded with insider trades by C-suite executives. Buybacks were largely considered market manipulation before the SEC itself, bowing to Reagan-era deregulation efforts, created a safe harbor against market manipulation liability in 1982.

“The SEC must stand behind the need to have basic transparency around stock buybacks,” added Renta. “Requiring transparency about what corporate insiders do with their shares during buybacks is key to ensuring that companies generate long-term value that supports investors, workers, and communities—not short-term stock-price bumps.”

For more information, read the blog we published when the Inflation Reduction Act passed with a stock buybacks excise tax.