Proof Washington Doesn’t Want You to Be Rich

Andy Snyder|May 10, 2023

Ah yes… Washington is punishing investors once again.

It’s quite clear the folks in charge aren’t all that fond of independent wealth. “Who’ll need us when they can fend for themselves?” they fret.

Biden’s new mortgage scheme is right out of Sherwood Forest… taking from the rich and giving to the poor.

California will now base residents’ electric bills on how much they make.

And the latest punitive regulations out of D.C. are aimed squarely at quelling one of the most lucrative moneymaking tactics of the last quarter-century.

Last Wednesday, the fine folks at the SEC approved new regulations for stock buybacks. By a 3-to-2 (party line) vote, the ayes had it. The rules require companies to fill out reams of paperwork in a half-assed attempt to punish businesses for – oh no – spending their money in the way they deem fit.

There are three main provisions under the new rules.

First, companies that repurchase their shares must now provide daily scorekeeping of their buybacks.

Under the old rules, they had to provide only monthly tallies.

Now we’ll be able to see what they bought every day. But don’t go thinking this will create any actual results… or anything we can trade on. The scorecards still need to be handed in only at the end of each quarter.

There won’t be any real-time data.

Companies must also check a box if insiders bought or sold shares within four business days of a new buyback announcement.

Call home the troops! This will save the world… especially considering most buybacks are announced alongside quarterly earnings reports – times when few insiders dare make a move.

And get this… The new law forces companies to explain the rationale for each purchase and disclose any policies aimed at limiting insider trading.

It’s nonsense. No company with a lawyer worth paying will answer any of those questions with even a smidge of detail.

Punishment

There’s zero doubt this move isn’t about making investing safer or more transparent.

It’s 100% punitive.

This White House has been going after buybacks since it took charge. First it enacted a 1% tax grab. Then Biden said he wanted to quadruple the take. And now, with the corporate world thumbing its nose at the administration by boosting buybacks to what’s expected to be a record-shattering $1 trillion this year, the team is fighting back by putting its paperwork police on the job.

It does nothing but waste investor money and – the true purpose – give the politicos something to talk about on the campaign trail.

It’s just as we reported over the weekend. The paperwork burden has soared under the current administration beyond what we saw during the Obama and Trump eras… combined.

It costs the business sector hundreds of billions of dollars each year.

Are you better off for it? Do you feel safer… richer… or freer?

Will buybacks slow because of these new rules?

No. Don’t be crazy.

But the government will grow. And the folks who write reelection ads will have one more bullet point to sound off about.

Buy companies that are buying back their own shares.

It will not only make you money… but piss off Washington too.

Good.