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Is a company buying back its stock not insider trading?
Posted on 12/12/12 at 9:25 am
Posted on 12/12/12 at 9:25 am
Obviously they should be allowed to practically do this... but humor me. What mechanisms/exemptions do they get from this? Obviously they are more totally aware of the companies pipelines and strengths/weaknesses... because they are the company.
Or am I way off base?
Or am I way off base?
2
Posted on 12/12/12 at 9:37 am to Swoopin
I would say that there would be more insider trading complications with the issuance of stock than with buybacks.
Small scale buybacks are almost never an issue. If it's a large scale buyback and the company has one or two large shareholders (>20%), I would say that it would be an issue, as those shareholders would be receiving a large benefit from "insider trading". If the ownership is sufficiently diluted, it is just the company returning capital to shareholders.
Small scale buybacks are almost never an issue. If it's a large scale buyback and the company has one or two large shareholders (>20%), I would say that it would be an issue, as those shareholders would be receiving a large benefit from "insider trading". If the ownership is sufficiently diluted, it is just the company returning capital to shareholders.
Posted on 12/12/12 at 9:40 am to Swoopin
It's my understanding that the buy backs are not considered insider trading and are legal because the companies announce in advance of the buy backs that they plan on doing so.
So the information about the buy backs is publicly available.
So the information about the buy backs is publicly available.
Posted on 12/12/12 at 10:36 am to LSURussian
Posted on 12/13/12 at 1:04 am to CHSBears
Are there blackout dates involved with a company buy-back?
Posted on 12/13/12 at 2:38 am to LSURussian
quote:this. i dont think they technically have to announce it, but when the buy order is put out it's made public. As long as everyone knows about it, it's not inside information, it's just used as an indicator for the relative strength of the company. plus there are a ton of timing and quantity restrictions to prevent price manipulations like pump and dumps as well.
not considered insider trading and are legal because the companies announce in advance of the buy backs that they plan on doing so.
This post was edited on 12/13/12 at 2:49 am
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