Park: Insiders Selling Into Tax-Break-Driven Buybacks Is a Basic Pump and Dump

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via jugglingdynamite:

As government revenues fall, deficits compound and debt levels leap, corporate executives have been directing the corporate cash freed up from recent tax breaks to pump up their company share prices with buybacks, while dumping their own personal holdings into the strength created.  ‘So long suckers’, indeed.  Buyers and holders beware, your longer-term financial interests are not a priority here.  See Executives are selling off their company stock at the fastest pace in a decade:

“Companies this year have announced $827 billion in spending to purchase their own shares — well above the buybacks that took place during all of 2007, which set the previous annual record.

‘Insiders have been committing lots of money for stock buybacks, and they’re not doing buybacks because they think stocks are cheap. They’re doing to it to pump up the stock so they can sell it,’ said David Santschi, director of liquidity research at TrimTabs.

…what we are seeing is that executives are using buybacks as a chance to cash out their compensation at investor expense.” In June, a group of senators asked the SEC to review its buyback rules.

Said Santschi: “Insiders are doing one thing with their own money, and another thing with shareholders’ money.”

 

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