Will stock buyback programs provide the next basis for securities litigation? They are certainly the topic of the day. CFO Magazine has a feature article discussing whether insiders should be permitted to sell shares while a stock buyback program is in effect. Meanwhile, the New York Times has a column (subscrip. req’d) speculating that some stock buyback programs may be used to increase executive bonus payouts that are contingent on an increase in earnings per share. Thanks to Mike Gumport for the link to the CFO Magazine article.
Quote of note (CFO Magazine): “This June, Audit Integrity, a Los Angeles–based accounting and governance analysis firm, sent a note to clients identifying 16 companies with market capitalizations of at least $100 million that it considers at high risk for fraudulent behavior, including USANA, because the companies have high levels of both stock buybacks and insider selling. Meanwhile, [a prominent plaintiffs’ attorney] is putting the finishing touches on a lawsuit he plans to file against ‘one of the most high-profile companies in the United States,’ along with its CEO, over issues relating to its buyback programs.”