Between record buybacks and dividend payments enabled by the GOP's huge corporate tax cuts, stockholders and investors are expecting to see their wealth increase about about $1 trillion this year, but some wealthy stockholders will see even more return than the average stockholder.
Corporate stockholders, meaning people who work within the company and have access to insider information, are making even more money through insider trading.
These privileged stockholders, such as company executives and managers, are using their knowledge of upcoming buybacks to increase the value of their own stock sales immediately after the announcement they know is coming.
From the Wall Street Journal:
Taking advantage of price bumps that often accompany share-repurchase announcements, company executives have been selling significantly more of their stock immediately after the news than they do beforehand, according to an analysis by Robert J. Jackson, Jr. , a commissioner at the Securities and Exchange Commission. [...]
Mr. Jackson, a former law professor, examined stock trades at 385 companies that announced buybacks in 2017 through this year’s first quarter. He found the percentage of insiders selling shares more than doubled immediately following their companies’ buyback announcements as many of the stocks popped.
Daily stock sales by the insiders rose from an average of $100,000 before the buyback announcements to $500,000 after them. The sellers received proceeds totaling $75 million more than had they sold before the announcement, the study concluded. At 32% of the companies, at least one insider sold in the first 10 days after the buyback announcement.
This sounds like insider trading, and it is, but it's also apparently legal.
Unbeknownst to me before reading this report from the Wall Street Journal, corporate buybacks are exempt from SEC regulations on market manipulation. The SEC also hasn't reviewed the rules in the past 10 years according to the Journal.
It's probably too late to review or change the rules now that executives and wealthy investors have already pocketed nearly the full value of the GOP's entire package of tax cuts. They've front-loaded the windfall for themselves and all we're going to see in the future is higher deficits with virtually no return for average Americans. A trillion dollars sunk into buybacks and dividends means a trillion dollars they chose not to invest in new business, products, and jobs.