Ideal Financial Solutions, Inc.(fka IFSL)

[DangermouseBuu]

http://www.eapdlaw.com/newsstand/detail.aspx?news=5

New Disclosure Rules
Background

In 1970, the SEC proposed Rule 13e-2 under the Exchange Act which would have required a company repurchasing its securities to comply with certain conditions, including a specific disclosure requirement. The SEC ultimately decided to deal with issuer repurchases by means of the Rule 10b-18 safe harbor, rather than a mandatory provision, and determined that a specific disclosure requirement for repurchases was not necessary.3

In adopting the new disclosure rules, the SEC cited increased investor interest in repurchases by companies and their executives together with concerns that companies may announce repurchase programs to obtain a market benefit without ultimately repurchasing any securities. The absence of repurchases or repurchases of only a small portion of the amount announced rarely trigger a disclosure obligation under a general materiality standard. Without specific disclosure requirements, investors cannot see whether companies are following through on their repurchasing plans. New Item 703 of Regulation S-K enables investors to track whether companies are actually repurchasing their shares and under what conditions.

Although the SEC used the amendments to Rule 10b-18 as the vehicle for adopting the new disclosure rules, the two are independent of one another. All repurchases of equity securities registered under Section 12 are reportable under Item 703, regardless of whether the repurchases were made pursuant to the safe harbor or in public or private transactions. Moreover, the failure to disclose a repurchase made in accordance with the conditions of Rule 10b-18 has no effect on the availability of the safe harbor for that repurchase.
New Item 703 of Regulation S-K

As a result of new Item 703 of Regulation S-K and corresponding changes to Form 10-Q and Form 10-K, public companies must provide a table showing, on a month-by-month basis, the repurchases made during the quarter covered by the periodic report, including4:

* the total number of shares purchased;
* the average price paid per share;
* the total number of shares purchased under publicly announced repurchase programs; and
* the maximum number (or approximate dollar value) of shares that may yet be repurchased under these programs.

In addition, a footnote disclosing the principal terms of any publicly announced repurchase plans or programs is required, including:

* the date that the plan was announced;
* the dollar or share amount approved;
* the expiration date of the plan;
* plans that expired during the period; and
* plans that the company has terminated during the period or plans under which the company does not intend to make purchases.

A footnote regarding repurchases made other than pursuant to a publicly announced plan or program is also required. This footnote must describe the number of shares repurchased outside of publicly announced plans and the nature of the repurchases (e.g., whether the repurchases were made in open market or private transactions, tender offers or in satisfaction of the company's obligations upon exercise of outstanding put options issued by the company or other transactions).

****Compliance with Item 703 does not excuse a company from disclosure obligations arising under other provisions of the federal securities laws.9 For example, companies continue to be required to disclose repurchases, to the extent material, in MD&A and the notes to the financial statements. Moreover, disclosure of the information required by Item 703 in a different form elsewhere in the Form 10-Q or Form 10-K will not constitute compliance with Item 703. In other words, a company may not discharge its Item 703 disclosure obligations with a cross-reference to a narrative description of repurchases in MD&A.*****

((In other words, the company posted a PR announcing that it intended to buyback shares. Since then the company has posted its current financial statements. If it had already bought back any shares those buyback transactions would have been summarily included in the release of their financial statements. The reason for them releasing the statements before the buyback, is that it is recommended any company planning to buy back shares have all material information previously disclosed.

Most companies will disclose ahead of time the exact amount of shares they plan on buying back, though the disclosure of the process of how those shares were purchased is always included in a month by month table in their sec forms.

If the company had bought back any shares it would have already been disclosed, showing that they have not yet bought any shares back. Does this make any sense?

Safe harbor rules were updated a few years ago. The rule isn't exactly as I explained in my previous post, but the manner with which they buy back shares protects our investment. ))