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| Subject: SEC Rule 10b-18 In 1982, the US Securities and Commission adopted Rule 10b-18,4 which provides that an issuer will not be deemed to have violated Sections 9(a)(2) and 10(b) of the Exchange Act, and Rule 10b-5 under the Exchange Act, solely by reason of the manner, timing, price, or volume of its repurchases, if the issuer repurchases its common stock in the market in accordance with the safe harbor conditions. Rule 10b-18’s safe harbor conditions are designed to minimize the market impact of the issuer’s repurchases, thereby allowing the market to establish a security’s price based on independent market forces without undue influence by the issuer. The practical effect of this rule was to encourage massive stock buybacks by corporations as a means of manipulating prices upwards in order to give value to executive stock options. Stock repurchases By John Schroy, on January 23rd, 2008 |  One comment  On September 17, 2007, Capital Flow Watch called the top of the Buyback Bubble, issuing a warning that stock prices might be in for a sharp fall. Throughout the last quarter of 2007, stock prices fell as funding for buybacks began to dry up, while executives rushed to exercise stock options before they were ‘under water’. Equity sales by households are expected to continue, until executive options are ‘under water’ or until corporations run out of funding for stock buybacks, whichever is first. January 23rd, 2008 | Print Article |  Email Article |  Topics: Andrew Carnegie, Bill Clinton, Enron, Hillary Clinton, John Maynard Keynes, Lou Dobbs, McKinsey, Neil Cavuto, SEC Rule 10b-18, Stock Buybacks, sub-prime mortgages, US SEC, Wall Street Journal | Category: Stock Buybacks | One comment |  Short urlSecurities fraud By John Schroy, on November 4th, 2006 | 3 comments  A basic principle of US security law is that material misstatements and omissions of fact in connection with the purchase and sale of any security are violations to be sanctioned. Corporations have argued that stock buybacks are equivalent to dividends. This article explains why this is not true and why suggesting buyback-dividend equivalency may constitute fraud. November 4th, 2006 | Print Article | Email Article | Topics: class-action litigation, Corporate Governance, dividends, SEC Rule 10b-18, Stock Buybacks, US SEC | Category: Stock Buybacks, featured | 3 comments | Short urlStock buyback shenanigans By John Schroy, on July 20th, 2006 | Leave a comment  In a major exposé of the misuse of executive options, the Wall Street Journal ran a front page article on July 15, 2006, reporting that as stocks sank after the the 9/11 attacks, scores of companies rushed to issue options to top officials. Some executives reaped millions. The SEC provided cover to this fraud, relaxing the already lax SEC Rule 10b-18. Executives were able to play on patriotic sentiment to personal advantage, diverting shareholder funds to their own pockets. July 20th, 2006 | Print Article | Email Article | Topics: back-dating of options, common stock legend, executive stock options, fraud, intrinsic value, Jeremy Siegel, SEC Rule 10b-18, Stock Buybacks, US SEC, Wall Street Journal, Warren Buffett | Category: Stock Buybacks, featured | Leave a comment | Short urlFeatured articles on inside pages
|    Capital Flow Watch has hundreds of articles on economics and investments. Articles have excerpts on the front pages, and on tag, category, search and archive pages. 
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