Investopedia

Continue to Site »

Rule 10b-18

Filed Under » , , , ,
Dictionary Says

Definition of 'Rule 10b-18'

An SEC rule that provides a "safe harbor" for companies and their affiliated purchasers when the company or affiliates repurchase the company's shares of common stock (i.e., they will not be deemed to have violated anti-fraud provisions of the Securities Exchange Act of 1934). The repurchases must fall within the four conditions of the rule. These cover the manner of purchase, the time of the repurchases, the prices paid and the volume of shares repurchased.
Investopedia Says

Investopedia explains 'Rule 10b-18'

The rule breaks down as follows:
  • Manner of purchase: The issuer or affiliate must purchase all shares from a single broker or deal during a single day.
  • Timing: An issuer with an average trading volume less than $1 million per day or a public float value below $150 million is unable to trade within the last 30 minutes of trading. Companies with higher average-trading-volume or public float value can trade up until the last 10 minutes.
  • Price: The issuer must repurchase at a price that does not exceed the highest independent bid or the last transaction price quoted.
  • Volume: The issuer can't purchase more than 25% of the average daily volume.
The SEC also specified more detailed disclosure requirements for repurchases. In each quarterly report on Form 10-Q and in the annual report on Form 10-K, the company must provide a table showing, on a month-by-month basis: the total number of shares purchased, the average price paid per share, the total number of shares purchased under publicly announced repurchase programs, and the maximum number of shares that may be repurchased under these programs (or maximum dollar amount if the limit is stated in those terms).

Articles Of Interest

  1.

    A Breakdown Of Stock Buybacks

    Find out what these company programs achieve and what it means for stockholders.

  2. Tips For When To Buy, Sell Or Hold

    Knowing how to make sound snap decisions is a must for any broker.

  3. What happens when a company buys back its shares?

    When a company performs a share buyback, there are a few things that the company can do with the securities they buy back. The company can reissue the stock on the market at a later time. In ...

  4. Should You Add A Securities License To Your Qualifications?

    Clients love planners who sell securities, but a securities license takes a lot of work. Learn if the stress and study are worth it.

  5. How To Report A Tax Cheat

    If you report a tax evader to the IRS, you could be eligible for a reward.

  6. GAAP And The IFRS Standards Convergence Efforts In 3 Substantial Areas

    Understand the specific steps that have been taken in hopes of converging the GAAP and the IFRS accounting standards, despite the philosophically and culturally based methodological differences ...

  7. Everything Investors Need To Know About Earnings

    We go over the concepts behind the excitement over the most important figure in the stock market.

  8. Is a dividend reduction a signal to sell?

    Although a dividend reduction is generally viewed as a signal to sell, the decision is not as clear-cut as if the dividend were to be eliminated altogether, which would be an unequivocal sell ...

  9. How Much Will Your Taxes Rise Based On Your Salary?

    Find out how high your taxes will rise this year.

  10. Department Of Justice Sues Standard & Poor's Over Mortgage Crisis - Is Moody's Next?

    The U.S. Department of Justice sued Standard & Poor's and is seeking more than $5 billion in damages.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  2. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  3. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  4. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  5. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  6. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
Trading Center