GM announces $4 billion stock buyback

Journal Record, The (Oklahoma City), Feb 10, 1998

DETROIT (Bloomberg) -- General Motors notified analysts of a $4 billion stock buyback 40 minutes before telling the public, giving some large investors a head start when the shares rallied.

The world's biggest automaker sent analysts a fax describing the buyback at 10:30 a.m. local time, according to investment analysts who received the information. GM shares began to rise from 60d at 10:52 a.m., jumping to 62 1/2 before the company's press release was made public at 11:11 a.m.

The incident comes amid scrutiny by the Securities and Exchange Commission on companies that disclose material information to Wall Street before the public. SEC Chairman Arthur Levitt has called for stricter rules to insure that companies disclose all material facts publicly to all investors. "There are always leaks," said Seth Glickenhaus, senior partner at Glickenhaus & Co., which owns 682,000 GM shares. He said he wasn't concerned about how the buyback was disclosed. GM said that the press release was faxed to analysts at 11 a.m. and was released to PR Newswire, which distributes press releases, at 11:02 a.m. Analysts were notified at 10:30 a.m. about a conference call with company officials but the stock repurchase wasn't included in that notice, GM spokesman Jim Finn said. The release was delayed because of problems with phone lines, he said. "We did want to get it out a little earlier," Finn said. Analysts said they received a fax about 10:30 a.m. from GM's investor relations department that told of the buyback and gave a time and phone number for a conference call with the company's chief financial officer. "They may have screwed up and released it a little early," said Burnham Securities analyst David Healy, who said he received the fax describing the buyback at 10:32 a.m. SEC officials had no immediate comment. The New York Stock Exchange, the principal exchange for GM shares, declined to comment. GM proposes buying back the shares, which equal 10 percent of its market capitalization, by March 1999. Its shares rose 2 3/8 to 62 15/16.