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> Stock buybacks used to be illegal in the States up until 1982. You can thank Raegan for that too This is not true, but seems to come up a lot. I guess it ma

by refurb 2y ago

> Stock buybacks used to be illegal in the States up until 1982. You can thank Raegan for that too This is not true, but seems to come up a lot. I guess it makes for one of those fun "internet facts" that people like to repeat without any investigation. Bonus points for blaming Reagan. Stock buybacks were not illegal before 1982. If you sit down even think through it, it doesn't even make sense they were illegal. Just like issuing new shares (or doing a stock split), companies have legitimate business needs to buy back stock (reduce the quantity of outstanding shares). What happened in 1982 was that the government made Rule 10b-18, which outlined the "safe harbor" requirements for stock buybacks, where if followed, the company could not be found liable for stock manipulation. https://www.skadden.com/-/media/files/publications/2020/03/trading-issues-arising-out-of-market-disruptions/rule_10b_18_safe_harbors.pdf https://www.skadden.com/-/media/files/publications/2020/03/t... So stock buy backs were legal before 1982, but companies faced a risk of stock manipulation if they were reckless in how they did it.

naasking 2y ago
> So stock buy backs were legal before 1982, but companies faced a risk of stock manipulation if they were reckless in how they did it. Sounds like a much better state of affairs.
- refurb 2y ago
  Really? You think it's bad that the government is explicit in its rules? I think that's a good thing. I'd rather have it be clear to all parties what is acceptable and what isn't, rather that a murky legal framework where you never know if you're breaking the law.
  - naasking 2y ago
    Being explicit is good unless it yields outcomes that are strictly worse, which seems to be where we are. I expect plenty of lobbying to clarify rules and be more explicit naturally comes with carefully crafted loopholes that permit unethical behaviour. In that case, being less explicit meant the regulators had discretion to go after truly abusive actors. This has upsides and downsides. I would always prefer more explicit rules if the rule-making process were not compromised.
  - SaintGhurka 2y ago
    This subject brings up so much rancor that I think you might have missed the possibility that there was no sarcasm intended in the post you responded to.
    - refurb 2y ago
      That’s why I asked
thrance 2y ago
I mean, from what I can read online, it seemed the practice was generally regarded as market manipulation prior to 1982 and so was de facto illegal. So yeah, thanks Reagan indeed. There are good reasons to blame him for his part in the current state of affairs.
- refurb 2y ago
  Not sure what you’re reading online, but it’s not correct. Stock buybacks were legal and happened before 1982. The “thanks Reagan indeed” is just your own internal biases. The President didn’t draft the law and the Democratic Congress passed it. So quite odd to blame a single person. It should be a warning against believing things on the internet because they conform to your biases. Check your sources.
  - thrance 2y ago
    I'm not even American... When I say "blame Reagan", I obviously don't mean him personally, rather his government or his neoliberal ideology even. And you keep acting like the 1982 law had no effect when it made the largely marginalized practice of stock buybacks mainstream. Maybe you should check your biases. https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-buybacks-mitigating-common-pitfalls/ https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-bu... https://crsreports.congress.gov/product/pdf/LSB/LSB10266 https://crsreports.congress.gov/product/pdf/LSB/LSB10266 https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cuts-trump-republicans https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cut... https://www.sciencedirect.com/science/article/abs/pii/S0165188923000283 https://www.sciencedirect.com/science/article/abs/pii/S01651...

by refurb 2y ago

naasking 2y ago

> So stock buy backs were legal before 1982, but companies faced a risk of stock manipulation if they were reckless in how they did it. Sounds like a much better state of affairs.

refurb 2y ago
Really? You think it's bad that the government is explicit in its rules? I think that's a good thing. I'd rather have it be clear to all parties what is acceptable and what isn't, rather that a murky legal framework where you never know if you're breaking the law.
- naasking 2y ago
  Being explicit is good unless it yields outcomes that are strictly worse, which seems to be where we are. I expect plenty of lobbying to clarify rules and be more explicit naturally comes with carefully crafted loopholes that permit unethical behaviour. In that case, being less explicit meant the regulators had discretion to go after truly abusive actors. This has upsides and downsides. I would always prefer more explicit rules if the rule-making process were not compromised.
- SaintGhurka 2y ago
  This subject brings up so much rancor that I think you might have missed the possibility that there was no sarcasm intended in the post you responded to.
  - refurb 2y ago
    That’s why I asked

thrance 2y ago

I mean, from what I can read online, it seemed the practice was generally regarded as market manipulation prior to 1982 and so was de facto illegal. So yeah, thanks Reagan indeed. There are good reasons to blame him for his part in the current state of affairs.

refurb 2y ago
Not sure what you’re reading online, but it’s not correct. Stock buybacks were legal and happened before 1982. The “thanks Reagan indeed” is just your own internal biases. The President didn’t draft the law and the Democratic Congress passed it. So quite odd to blame a single person. It should be a warning against believing things on the internet because they conform to your biases. Check your sources.
- thrance 2y ago
  I'm not even American... When I say "blame Reagan", I obviously don't mean him personally, rather his government or his neoliberal ideology even. And you keep acting like the 1982 law had no effect when it made the largely marginalized practice of stock buybacks mainstream. Maybe you should check your biases. https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-buybacks-mitigating-common-pitfalls/ https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-bu... https://crsreports.congress.gov/product/pdf/LSB/LSB10266 https://crsreports.congress.gov/product/pdf/LSB/LSB10266 https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cuts-trump-republicans https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cut... https://www.sciencedirect.com/science/article/abs/pii/S0165188923000283 https://www.sciencedirect.com/science/article/abs/pii/S01651...