Secretary, U.S. Securities and Exchange Commission Vanessa Countryman,
I welcome the proposed rule of the Securities and Exchange Commission titled “Share Repurchase Disclosure Modernization” (File No: S7-21-21) and appreciate the opportunity to comment.
I am concerned about companies’ increased use of funds for stock buybacks, which reached a record $882 billion in 2021, while white, Black, and Brown working families continue to struggle. Stock buybacks divert resources from investments in worker wages and benefits, productivity-enhancing capital upgrades, and research and development, while also exacerbating economic inequality and the racial wealth gap.
I support the Commission’s proposed rule, a central component of which is daily disclosures of stock buybacks. This change would: minimize the amount of time insiders have an edge over other investors; give the Commission the tools to enforce existing laws; and allow researchers and academics to more effectively study the effects of stock buybacks within companies, industries, and our economy as a whole.
I also support additional disclosures the Commission is contemplating, including whether companies “specifically considered other uses for the funds being used for the share repurchase” and “information regarding how share repurchases are financed or their anticipated or actual impact on leverage ratios or the cost of capital.” These disclosures are important for longer-term investors wanting to ensure the company is making the investments necessary for sustainable growth over time.
In addition to supporting the Commission’s proposals, I recommend the Commission go further. To better prevent market manipulation, I recommend replacing the current safe harbor provision with a bright-line rule, and making stock buybacks beyond the bright-line rule unlawful. To better prevent insider trading, I recommend the Commission prohibit trading by insiders during stock buybacks announcements and executions, and within at least ten days of these events.
I thank the Commission for proposing this important rule and appreciate the Commission’s consideration of the above recommendations to make the rule as effective as possible.