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Dems offering bill aimed at curbing stock buybacks

Dems offering bill aimed at curbing stock buybacks
© Keren Carrion

A group of Senate Democrats is planning to introduce a bill Thursday aimed at curbing stock buybacks — a practice that many companies have announced plans to engage in since President TrumpDonald TrumpSacha Baron Cohen calls out 'danger of lies, hate and conspiracies' in Golden Globes speech Sorkin uses Abbie Hoffman quote to condemn Capitol violence: Democracy is 'something you do' Ex-Trump aide Pierson planning run for Congress MORE signed the new tax-cut bill.

The legislation — which is being introduced by Sen. Tammy BaldwinTammy Suzanne BaldwinBiden signs supply chain order after 'positive' meeting with lawmakers Democrats want businesses to help get LGBT bill across finish line Democrats offer resolution denouncing white supremacists ahead of Trump trial MORE (D-Wis.) and co-sponsored by Sens. Elizabeth WarrenElizabeth WarrenSenate mulls changes to .9 trillion coronavirus bill Exclusive: How Obama went to bat for Warren Minimum wage setback revives progressive calls to nix Senate filibuster MORE (D-Mass.) and Brian SchatzBrian Emanuel SchatzMinimum wage setback revives progressive calls to nix Senate filibuster Little known Senate referee to play major role on Biden relief plan Bipartisan group of lawmakers proposes bill to lift rule putting major financial burden on USPS MORE (D-Hawaii) — is designed to give employees more of a say in how the companies they work for spend their profits.

“The surge in corporate buybacks is driving wealth inequality and wage stagnation in our country by hurting long-term economic growth and shared prosperity for workers," Baldwin said in a news release. "We need to rewrite the rules of our economy so it works better for workers and not just those at the top. This legislation makes it clear that empowering the voices of our workers and investing in our workforce is more important than using tax breaks and corporate profits to reward shareholders with more stock buybacks.” 

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The bill would repeal a Securities and Exchange Commission rule that makes it easier for companies to do stock buybacks, and it would also end corporations' ability to repurchase stocks on the open market. Companies would still be able to buy back shares through tender offers, which are subject to more disclosure requirements than open-market purchases, according to the release from Baldwin's office.

Additionally, the measure would require one-third of a public company's board to be chosen by its workers.

Groups such as the AFL-CIO, Take On Wall Street and Americans for Financial Reform are supporting the bill.

Heather Slavkin Corzo, director of the office of investment at the AFL-CIO, said that Baldwin's bill "will give workers a seat at the table to ensure that our economy once again rewards work instead of just wealth.”

The bill comes as Democrats have been highlighting companies' plans for stock buybacks following the passage of Republicans' tax-cut law. Democrats argue the increase in stock buybacks this year shows that the tax law is mainly benefiting the wealthy, rather than the middle class.

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Republicans, however, have said that stock buybacks help middle-class taxpayers who invest in stocks through their retirement accounts.

CNN first reported on the bill.

- updated on March 22 at 4:18 p.m.