Earlier this week, the U.S. Chamber won a monumental victory when the Fifth Circuit blocked the Securities and Exchange Council’s (SEC) stock buyback rule.
Fill me in: The SEC’s stock buyback rule would have disincentivized companies from using stock buybacks to grow their business and improve returns for savers and investors across the country.
What are stock buybacks? When public companies have extra cash, they frequently repurchase their stock as a means of efficiently managing that excess capital.
Before the SEC created a means for companies to buy back their stock, there was considerable evidence that some managers would use surplus cash for projects or acquisitions that were not in the best economic interest of the company.
Today, share repurchase plans, also called stock buybacks, are a tool used as part of broader management strategies that help companies make healthy financial decisions and provide value to investors. The U.S. Chamber sued the SEC on May 12 not just because of their position on stock buybacks, but to protect businesses from government micromanagement.