How Is This Legal?

Facebook has had a share buyback program in place for a few years now.

https://www.cnbc.com/2018/12/07/facebook-increases-stock-buyback-program-by-9-billion.html

The total buybacks are in the neighborhood of $17 Billion starting in 2017, and another $9 Billion this year.

AT THE SAME TIME AS THESE BUYBACKS.....Zuckerberg sold a reported $3.5 Billion in shares earlier this year! After taking a pause, he is selling about $100 Million per day, right now!

This is legal. It should not be legal. 

A suggestion...Officers and Directors and Insiders of publicly-traded corporations should not be able to sell their shares for at least two years after a buyback.  

Why?

Because there is too much temptation on corporate managers and insiders to use shareholders' money to pump share prices through buybacks, and then reap much higher profits when they sell their own shares into the buyback frenzy that they themselves created.

The counterargument is that buybacks pump prices for all shareholders so they benefit everyone.  

But this only applies if everyone sells like the insiders do after rices are pumped, and we all know that they almost never sell.

If companies have massive cash reserves and want to help their shareholders, they should issue special dividends. (Case in point - Facebook has over $40 Billion in cash and no debt.  This is about $15 per share!) This approach puts cash in everyone's hands, leaving it up to the shareholders whether they want to take the cash and buy more of the company's stock.

What happens if this goes unchecked?

Well, Sears happens - $6 Billion in buybacks since 2009, and $5 Billion in debt when it finally declared bankruptcy and died. 

Maybe they could have used that cash building an Internet presence to take on their competitors? I'm just saying...

The Swindle Continues.