The administration of US President Joe Biden is looking at restricting stock buybacks by imposing a limit on the timeline when executives can sell shares, New York Times reported.

  • A budget proposal in the White House seeks to impose a three-year temporary ban on the ability of executives from selling shares after a buyback after studies show that top officials historically dispose of more shares after a buyback.
  • Such a proposal faces uncertainties in Congress but would effectively revamp Wall Street given its limits on the buybacks, with S&P 500 firms purchasing a record-high of $882 billion of their own stocks in 2021.
  • Goldman Sachs earlier predicted buybacks to reach as much as $1 trillion this year, as advocates say it is a good way for firms to utilize their excess cash. Critics have flagged this, however, noting that it causes an artificial increase in stock prices.

The Biden administration earlier proposed to limit buybacks with a 1% tax on such activities. QQQ is down 0.08%.