Analysts Get the Jump on Major GM Stock Buyback

General Motors Corp. said Monday that it will buy back another $4 billion worth of its shares, or 10% of the total outstanding, again using its cash to try to buoy a stock that has failed to keep up with the market or that of rival Ford Motor Co.

But GM apparently notified analysts of its buyback 40 minutes before telling the public, giving some large investors a head start when the shares rallied.

The world’s biggest auto maker sent analysts a fax describing the buyback at 10:30 a.m. Detroit time, according to some recipients. GM shares began rising from $60.38 at 10:52 a.m. and hit $62.50 before the company’s news release was made public at 11:11.

GM stock ended the day at $62.94, gaining $2.38 in New York Stock Exchange trading.

The incident comes amid scrutiny by the Securities and Exchange Commission of companies that disclose material information to Wall Street before they tell the public. SEC Chairman Arthur Levitt has criticized companies for favoring analysts and has urged disclosure policies that make material information equally available to all investors.

GM proposed buying back the shares by March 1999.

SEC Corporation Finance Director Brian Lane said that, in general, information provided to analysts in the “ordinary course of business” does not raise legal concerns at the SEC.

If a company takes unusual steps to relay information to some analysts ahead of the public, however, it “could constitute possible insider trading,” Lane said.