So here's the issuing with buying back, it creates an artificial demand on the stock. As we know, demand increases price, so the price of the stock goes up. In order words becomes inflated. People's 401k, pension are invested in those stocks. Meanwhile, the folks CEO/Boards behind the buybacks cash out! The price of the stock doesn't reflect the real value in normal conditions. When the music stops, folks with 401k, pensions invested in those will be the ones losing big time!
This is not correct. Companies conducting buybacks do so at a low rate over a long period of time exactly to avoid having the impact that you're describing. Companies buy their shares back at the market price, and the normal transaction volume of a large companies shares dwarf the size of buybacks it may be conducting.
Why would there be a specific law covering this situation? It's an obvious violation of fiduciary responsibility to buy back shares in an inefficient, price-elevating fashion.
