A simple three-page bill introduced by Wisconsin U.S. Senator Tammy Baldwin and several other Democratic lawmakers in 2018 and 2019 would ban open-market repurchases, while still allowing the tender offers that made Teledyne great. There are legitimate reasons to do open-market buybacks, though, so I wonder whether a better if messier approach might be something like what Congress did in 1968, charging the SEC with redefining what constitutes a “fraudulent, deceptive, or manipulative” buyback in the context of stock-based executive-compensation programs. The reasoning offered by Shad’s SEC for mostly abandoning this effort in 1982—that buybacks are “seldom undertaken with improper intent”— seems in retrospect either spectacularly naive or spectacularly cynical.

This article was provided by Bloomberg News.


  1. Disclosures (or maybe it's just name-dropping): I was tangentially involved in the editing of the Harvard Business Review article by Lazonick that is linked to here, as well as that of Thorndike's book, which was published by the Harvard Business Review Press. Carol Loomis was a colleague of mine at Fortune, and I know Christine Jolls because our kids were middle-school classmates. Also, in the late 1990s, I pocketed a modest Time Warner employee-stock-options windfall that may have been enabled in part by buybacks.
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