The Biden administration wants to restrict stock buybacks by placing limits on executives’ ability to sell shares, report says

• The Biden administration is seeking to slow corporate stock buybacks, according to DealBook. 
• A White House budget proposal would call for a three-year freeze on execs selling shares after a buyback.
• Last year saw a record $882 billion in S&P 500 corporate buybacks, and Goldman Sachs has predicted $1 trillion for 2022. 

The Biden administration is seeking to slow stock repurchases by limiting when executives can sell shares, according to a Monday DealBook report. 

A forthcoming White House budget proposal will call for a three-year freeze on executives selling their shares after a buyback, the newsletter reported. Some research has pointed out that top execs sell far more stock in the days after a buyback announcement compared to any other time. 

The odds of such a restriction passing the narrowly divided Congress are unclear. But if it goes through, it could cap the burgeoning wave of buybacks and reshape Wall Street. 

S&P 500 companies purchased a record $882 billion of their own stocks last year, with Apple spending over $20.4 billion buying back its own shares and Meta Platforms spending $15 billion.

Buybacks are already off to a sizzling start this year, and Goldman Sachs has predicted they will hit $1 trillion in 2022. 

Proponents of buybacks say they are a good way for companies to put excess cash to use, while critics have said they artificially raise stock prices and pad stock-based compensation of execs.

The Biden administration’s proposal follows an earlier effort to limit buybacks that failed. As part of last year’s $2.2 trillion climate and social spending bill, the White House proposed a 1% excise tax on buybacks, saying that executives “use [buybacks] to enrich themselves rather than investing workers and growing their businesses.”