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In ordinary words.
A company may spend huge amounts repurchasing its own shares instead of investing in wages or operations.
In legal terms.
SEC Rule 10b-18 establishes a conditional safe harbor from certain market-manipulation liability for qualifying issuer repurchases.
Where it stops being legal.
Safe-harbor conditions and antifraud, insider-trading and disclosure rules still apply.
General U.S.-focused information. Cases and statutes may have jurisdiction-specific exceptions. This citation may be a general primer; verify the governing primary authority. Not legal advice.