Hillary Clinton to call for more transparency in stock buybacks
By Jonathan Allen NEW YORK (Reuters) - U.S. presidential candidate Hillary Clinton will criticize the surge in public companies using profits to buy back stocks in a speech she is due to give on Friday, her campaign said, arguing the practice comes at the expense of long-term investment. Clinton, the favorite to win the Democratic Party's nomination for the November 2016 election, will use her speech in New York City to decry what she calls "quarterly capitalism", according to her campaign. A central argument of her economic platform is that the tax code and U.S. laws currently allow or even encourage companies to focus on short-term gains in stock prices in a way that undercuts the economy's long-term growth and harms middle-class incomes. Clinton will say companies need to be more transparent about the use of stock buybacks, which can temporarily boost a company's share price, and that disclosing them in bulk at the end of every quarter was not enough, her campaign said in a short preview of her speech emailed to reporters on Thursday. Although the email did not spell out how greater disclosure might help, the economist Bill Lazonick, an informal adviser to Clinton's campaign, has said a lack of daily disclosures on buybacks gives executives the opportunity to trade without being easily detected, possibly on inside information. Companies in the Standard & Poor's 500 stock market index spent $566 billion buying back their shares in 2014, up from $480 billion in 2013 and the highest amount since 2007, according to research firm FactSet. Clinton will call for a review of the rules governing activist investors, who are increasingly a driving force behind buybacks, need to be reviewed. Clinton, a former New York senator and U.S. secretary of state, will also say U.S. tax laws that typically apply to executives' incomes, much of which often come in form of stock and capital gains, also discourages long-term investment, the campaign's email said, without providing further details. She was critical of generous executive pay packages during her last attempt to win the presidency in 2008, when she also ran on a platform seen to be to the left of the more centrist economic policies of her husband, Bill Clinton, when he was president. Her nearest rival for the nomination, the socialist Vermont senator Bernie Sanders, has managed to draw large crowds with an economic platform that more directly appeals to the party's increasingly vocal progressive wing. (Reporting by Jonathan Allen; Additional reporting by Luciana Lopez and David Gaffen; Editing by Michael Perry)
