Not that we don’t already have ample evidence indicating that CEOs are opportunistically timing their trades around buybacks. A 2018 SEC investigation found that executives cash out much more of their personal stock immediately after announcing a buyback than on an ordinary day.
But that SEC study relied on non-public data. The new regulation would shine a bright light on individual corporate insiders who appear to be gaming buybacks to pad their own pockets.
The Chamber of Commerce Board of Directors is stacked with representatives of companies that have spent billions on buybacks in recent years, including Chevron, ConocoPhillips, Comcast, Hilton, Cognizant, and Pfizer. None of these companies want to see their executives in the headlines for unloading boatloads of stock after a buyback announcement. At best, it would be embarrassing. At worst, it could be the beginning of the end of the buyback bonanza.
Immediately after the SEC issued the new regulation, the Chamber of Commerce sued to block it. Of course their lawsuit downplays their self-centered concerns and instead focuses on legal technicalities, mostly related to the SEC’s cost-benefit analysis of the regulation.
In perhaps the lobby group’s most imaginative argument, they assail the Commission for insufficiently analyzing the impact of the new excise tax, which went into effect in 2023. If this tax reduces buyback activity, the Chamber reasons, companies would still bear the administrative costs of disclosure but the benefits would be lower. Less buybacks, less need for transparency. This would be like arguing that if federal fines are effective in reducing industrial pollution, then companies no longer need to report their toxic emissions data.