SEC May Extend Rules Easing Stock Buybacks

The Securities and Exchange Commission may extend for a third week, or longer, rules that give companies more freedom to buy their own stock, SEC Chairman Harvey Pitt said Monday.

The SEC will decide Friday whether to extend emergency rules enacted ahead of markets’ reopening in the wake of the terrorist attacks. The temporary measures, which are set to expire Friday, remove restrictions on when companies can buy their own stock and how much they can buy.

The five-day SEC emergency measures have been extended once, and the commission will decide this week whether to keep them in place for as much as an additional “10 days or longer,” Pitt said. Companies may buy back shares to help shore up their stock prices during periods when many investors want to sell or when few investors want to buy.

The SEC, using its emergency authority for the first time, rolled out the rules a week ago as markets opened after a four-day trading suspension. Harvard University law professor John Coffee has said easing buyback restrictions may have prevented market panic last week, although U.S. stocks still suffered their worst weekly losses since 1933.