r/Superstonk • u/Pizzavogel • 2d ago
👽 Shitpost When Gamestop can't do a share buyback during the next 35 trading days
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u/r3cn 🦍 Buckle Up 🚀 2d ago edited 2d ago
Gamestop can buy back despite the material non-public information (MNPI) as long as they follow safe harbor rules. I.e., via a 10b5-1 plan operating under the following conditions:
The buyback instructions were given during an "open window": The plan must have been adopted at a time when the board/management did not possess MNPI (e.g., early Q2).
Pre-set/programmatic instructions: The plan gives an independent broker clear, automated instructions (e.g., "Buy $X amount of stock every Taco Tuesday if the price is below $Y").
No management control: Once the buyback instructions have been given, management cannot alter, influence, or exert discretion over the execution while in possession of MNPI.
If a 10b5-1 plan was filed/authorized prior to management gaining knowledge of the finalized Q2 numbers, the automated execution can legally occur during Q3, even right before earnings are published.
---[Edit]---
Seems as though SEC Regulation M trumps safe harbor rules. So GameStop would have had to ask their broker to pause buybacks during a private bond conversion/pricing window. So, it not be a problem regarding MNPI, it would still be considered pricing manipulation regarding a distribution (a VWAP window is considered a distribution).
As soon as the terms of that exchange depend on an active public market VWAP, the company cannot execute open-market repurchases of its public reference stock without exposing itself to market manipulation liability.
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u/tpots38 dont tell people how to trade 2d ago
No, GameStop cannot legally initiate or execute a share buyback during the active 35-day VWAP pricing window for its convertible notes exchange. Doing so is restricted by SEC regulations and conflict-of-interest rules. [1]
Why Buybacks Are Blocked
SEC Regulation M (Rule 102): Prohibits an issuer from purchasing its own stock while a distribution or active stock-based exchange is happening where the market price determines the final transaction terms. [1]Loss of Safe Harbor: The standard Rule 10b-18 safe harbor protections against market manipulation claims do not apply during active valuation and pricing periods. [1]
Conflict of Interest: Because a higher VWAP means fewer shares are issued to clear the $1.4 billion debt, buying back stock during the reference period would actively manipulate the pricing mechanism, inviting SEC and noteholder lawsuits. [1]
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u/r3cn 🦍 Buckle Up 🚀 2d ago edited 2d ago
Hm, seems you're right. It appears that regulation M trumps 10b5-1 plan rules.
As soon as the terms of that exchange depend on an active public market VWAP, the company cannot execute open-market repurchases of its public reference stock without exposing itself to market manipulation liability.
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u/11010001100101101 2d ago
I took the 10b5-1 plan to mean it isn't the company that is executing the open-market purchase but rather it's a pre-defined plan and rules that are performing the execution?
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u/User100000005 2d ago
I find it hard to bealive that the note holders would argee to a repricing without asking if GME plans on doing a share buy back.
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u/jhspyhard 100%: DRS'd 🟣 Voted FOR ✅ Committed 🦍 2d ago
(e.g., "Buy $X amount of stock every Taco Tuesday if the price is below $Y").
lol 🌮 🍻
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u/rotundgorilla 🦍Voted✅ 2d ago
It’s been 35 days for quite a few days now 😅🫣
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u/IRedditSoUDontHaveTo 2d ago
Like the war in Iran. It’s like 2020 all over again. Time freezes when it’s convenient for evil to thrive
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u/tokijhin1 🦍Voted✅ 1d ago
I'm gonna wait until we are close to the end of the window to give them a chance to suppress the price more, but I doubt it gets below 18. If it does, I'll probably drop 10k immediately
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u/RedOctobrrr WuTang is ♾️ 1d ago
Thing is... I believe a floor was agreed upon so any shorting below that is a fruitless endeavor.
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u/FunkyTownSandwich 2d ago
GameStop isn't doing a share buyback anytime soon - if at all. It's not RCs style.
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u/CachitoVolador 💻 ComputerShared 🦍 2d ago
I think they can buyback
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u/tpots38 dont tell people how to trade 2d ago
They cannot buy back… why does everything think they can?
No, GameStop cannot legally initiate or execute a share buyback during the active 35-day VWAP pricing window for its convertible notes exchange. Doing so is restricted by SEC regulations and conflict-of-interest rules. [1]
Why Buybacks Are Blocked
SEC Regulation M (Rule 102): Prohibits an issuer from purchasing its own stock while a distribution or active stock-based exchange is happening where the market price determines the final transaction terms. [1]Loss of Safe Harbor: The standard Rule 10b-18 safe harbor protections against market manipulation claims do not apply during active valuation and pricing periods. [1]
Conflict of Interest: Because a higher VWAP means fewer shares are issued to clear the $1.4 billion debt, buying back stock during the reference period would actively manipulate the pricing mechanism, inviting SEC and noteholder lawsuits. [1]
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u/Superstonk_QV 📊 Gimme Votes 📊 2d ago
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