Is a company buying back its stock not insider trading? | TigerDroppings.com

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Swoopin
Auburn Fan
Member since Jun 2011
16841 posts

Is a company buying back its stock not insider trading?



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?







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TheHiddenFlask
Clemson Fan
The Welsh red light district
Member since Jul 2008
16927 posts

re: Is a company buying back its stock not insider trading?


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.






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
82733 posts

re: Is a company buying back its stock not insider trading?


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.






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CHSBears
Texas A&M Fan
Baton Rouge
Member since Aug 2007
520 posts

re: Is a company buying back its stock not insider trading?


Now this is a buyback!

LINK







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matthew25
Ole Miss Fan
Member since Jun 2012
3438 posts

re: Is a company buying back its stock not insider trading?


Are there blackout dates involved with a company buy-back?





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el duderino III
Texas Fan
austin
Member since Jul 2011
1519 posts

re: Is a company buying back its stock not insider trading?


quote:

not considered insider trading and are legal because the companies announce in advance of the buy backs that they plan on doing so.
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.



This post was edited on 12/13 at 2:49 am


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