Senators Think Stock Buybacks Might Be Manipulative

A thing that I learned recently1434136152147 and sort of couldn't believe is that some politicians, like Senators Elizabeth Warren and Tammy Baldwin, think that stock buybacks are bad and that the Securities and Exchange Commission should forbid them as market manipulation. I mean the first part of that did not surprise me. Lots of people think that stock buybacks are bad. Larry Fink thinks it! It's a totally respectable position.

But the second part is super weird. The SEC is not especially in the business of regulating what companies do with their money. If you are a public company and you want to spend your money on paying your employees or developing a new car or building a big headquarters or giving it back to your shareholders, that is up to you, not the SEC. All the SEC asks is that you disclose whatever you're doing. What to do is for you to decide, however corporations decide things. In practice, mostly managers and boards of directors decide, but sometimes shareholders get involved. To the extent the shareholders and managers disagree -- generally because shareholders want their money back and managers prefer to keep it -- the SEC does sometimes get involved: Proxy fights are subject to proxy rules, management discussions with shareholders are covered by fair disclosure rules, and even conversations among shareholders might implicate shareholder disclosure rules.1434135965863