EXECUTIVE SUMMARY
* STOCK REPURCHASE PROGRAMS CAN POSE PROBLEMS for financial executives because they may raise concerns at the SEC about insider information and stock manipulation.
* IF THE COMPANY HAS MATERIAL INFORMATION that has not been made public it should not buy back stock.
* BOARD AUTHORIZATION FOR PURCHASE OF that company's stock for the corporate treasury should specify:
* The maximum amount of money to be spent, or the maximum number of shares to be acquired.
* The rationale for the program.
* The time period covered.
* GETTING A WRITTEN AGREEMENT from the broker that the program will follow SEC Rule 10b-18 is a good idea. It should specify that:
* The company and affiliated purchasers may work with only one broker or dealer on any single day.
* The company may not buy on the opening trade on the NASDAQ National Market or during the last half hour of scheduled trading.
* The company's purchase or bid price may not exceed the highest current independent bid quote or last independent sale price, whichever is higher.
* The company must stay within trading volume restrictions unless it is doing a block trade
Block Trade
An order/trade submitted for sale or purchase of a large quantity of securities. Also known as "Block Order".
Notes:
In general, 10,000 shares of stock (not including penny stocks) or $200,000 worth of bonds would be considered a block trade.
See also: Auction Market, Block House, Bond, Elephants, Iceberg Order, Institutional Investor, Security, Shares
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