[throwaway_ab]

For them to be effective at returning money to shareholders, the action of buying stock is intended to take stock out of supply thus increasing share price value. Exactly as you say.

Yet, this is clearly a form of stock manipulation, as it's an action to manipulate the share price.

Whilst it is stock manipulation, it's debatable if it should be legal.

I believe it should be legal, it's an efficient way to increase share value without adding to someone's income, thus often carries no immediate taxable obligation.

However one could argue that these methods of moving wealth around without taxable events triggering adds to the fuel for calls to tax unrealised gains on all stock.

So in the long run we are all worse off.

Those laws will likely come regardless, as a way to fight the billionaire class, so stopping stock buybacks at this stage is unlikely to do anything.

[matwood]

Dividends also change the share price, should those be illegal? What about announcing new products?

[Drakim]

It does effectively legalize a form of insider trading though, a company would never do a massive stock buyback right before dropping bad news because the stocks they are now holding goes down in the price.

[andsoitis]

> form of insider trading

Rule 10b-18 is designed to prevent companies from using buybacks to manipulate the market, stating that share buy backs must meet 4 conditions:

1. all shares must be purchased during a single day and from a single broker or via a single deal

2. larger companies cannot authorize buybacks within the last 10mins of the day and smaller companies can't authorize them within the last 30 mins

3. companies have to buy back their stocks at a price lower than or equal to the highest independent bid

4. companies can't buy back more than 25% of the average daily volume