SEC Stock Buyback Rules Examined
SEC Rule 10b-18 provides issuers with a safe harbor from liability for market manipulation under Sections 9(a)(2) and 10(b) of the Exchange Act and Rule 10b-5 under the Exchange Act when issuers bid for or repurchase their common stock in the market in accordance with the Rule’s manner, timing, price and volume conditions. Each of the conditions of Rule 10b-18 must be satisfied on each day that a repurchase is made.
The material portions of Rule 10b-18 are as follows:
Definition. A “Rule 10b-18 purchase” is generally defined as a purchase or any bid or limit order of an issuer’s common stock by or for the issuer or any of the issuer’s affiliated purchasers.
To be able to rely on Rule 10b-18 in make repurchases, the following four (4) conditions must be met.
- Time of Purchase. The Rule restricts issuers from making repurchases that constitute the opening transaction in the security on a trading day, or