Statement on Share Repurchases Adoption

Washington D.C.

Good morning and thank you Chair Gensler and my fellow commissioners. And, most importantly, congratulations to the staff for completing this important rule. Your expertise, acuity, and hard work cannot be over-emphasized or over-recognized. You are true public servants who grapple with challenging questions every day, who provide well-reasoned analyses or responses, and are informed by decades of expertise and experience.

Today’s meeting is the culmination of that hard work. And before us is a final rule that advances the goals of the foundational statutes of our agency; statutes that provide investors and the markets with a continuous disclosure regime that evolves according to, and modernizes with, investor and market needs. More specifically, this rulemaking provides investors with more comparable, structured, and comprehensive disclosures about corporate share buybacks. This is no small issue. In 2021 alone, share buybacks of U.S.-listed companies amounted to $950 billion dollars, and the amount of disclosure available to investors has been relatively limited.[1]

Under today’s rule, disclosures would be enhanced to include tabular disclosure with date specific detail about the total number of shares purchased, the average purchase price,[2] whether such purchases are intended to satisfy the Rule 10b5-1 and Rule 10b-18 safe harbors,[3] whether insiders traded around buybacks announcement dates,[4] and the policies and procedures relating to officer and director transactions during a buybacks program.[5] Additionally, investors would be provided information about the objective or rationale of each buybacks program, and the process or criteria used to determine the amount of shares to be bought back.[6] Such disclosures would provide more comprehensive information for investors, allowing them to better understand how such programs are impacting the market, the corporation’s motivation and rationale to use funds to conduct buybacks rather than other projects, and executive transactions during buybacks announcements and activity - all ultimately shedding more light on corporate value.[7]

And, as I've noted before, this is bread-and-butter[8] work for the staff who have deep and unquestionable expertise. The Securities Act of 1933 and the Securities and Exchange Act of 1934 did not prescribe every possible iteration of disclosure and its presentation. As we all know, the markets, issuers, investors, and what informs the fundamental value of businesses evolves – and does so quickly at times. To put it quite simply, the SEC aims to provide a baseline of quantitative and qualitative disclosure, and presentation of that disclosure, so that investors may access it efficiently and with a high degree of reliability, which, in turn, promotes capital formation. This enables the functioning of the capital markets that American investors rely on to fund retirement, housing, education, and healthcare. And today’s rule supports that important objective.

Thank you to the staff in the Division of Corporation Finance, Division of Investment Management, Division of Economic and Risk Analysis, Office of the General Counsel, the Office of the Secretary, the Office of Information Technology, the staff of all the Commissioner’s offices, and to all of the staff who contributed.

[1] See, e.g., Share Repurchase Disclosure Modernization, Release No. 34-[] at V.A.2 (adopted May 3, 2023) [hereinafter Release].

[2] See Release at Item 601.

[3] See Release at id. See also Release at Item 408(d) would require quarterly disclosure about an issuer’s adoption and termination of 10b5-1 plans.

[4] See Release at id. See also Release at II.A (“by timing their sales to closely follow issuer purchases, executives can benefit in ways that confer a personal benefit to executives without necessarily increasing the value of the firm”); Commissioner Robert J. Jackson Jr., Stock Buybacks and Corporate Cashouts, (June 11, 2018) (finding insider transactions close in time to buybacks announcements and asserting that “[e]xecutives often claim that a buyback is the right long-term strategy for the company, and they’re not always wrong. But if that’s the case, they should want to hold the stock over the long run, not cash it out once a buyback is announced. If corporate managers believe that buybacks are best for the company, its workers, and its community, they should put their money where their mouth is”).

[5] See Release at Item 703.

[6] See Proposal at id.

[7] See Proposal at V.A.2.

[8] Commissioner Caroline A. Crenshaw, Moving Forward in Our Lane (Oct. 2022); Commissioner Caroline A. Crenshaw, Late Summer Sunshine: Statement on the Adoption of Pay Versus Performance (Aug. 25, 2023).

Last Reviewed or Updated: May 8, 2024