Add this,(notice block trades)from journalofaccoun

Add this,(notice block trades)from journalofaccountancy.com>>>>

• On any single trading day, the company can't purchase more than the greater of either one round lot (100 shares) or the number of round lots that is closest to 25% of the company's stock's average daily trading volume in the four previous calendar weeks.

The volume restriction in the safe harbor allows an exception for block purchases. That can increase a program's flexibility significantly. To qualify as a block, the stock purchase must have at least one of the following characteristics:

• A price of $200,000 or more.


• At least 5,000 shares and a price of $50,000 or more.


• At least 20,000 shares and 150% of the stock's average daily trading volume (excluding block trades) for the preceding four calendar weeks.

"So if there is a big chunk of shares out there—and often these are privately negotiated trades that are not on the market—that trade isn't included in the volume restriction," Donegan says." The idea is that there isn't the opportunity for market manipulation when the company is buying a large block back from one stockholder." In fact, if such a large block were to be thrown into the open market, it would probably cause a supplydemand imbalance, forcing the stock price down. That would not be good for the other investors.

CPAs should ensure that their company has "a firm, and regularly adhered to, insider trading policy about which employees, officers and directors and others have been informed, and about which they are regularly updated and reminded," Barnard says. The corporate repurchase program should conform to that insider trading policy. At most companies, that means that employees must clear purchases of the company's stock in advance through the legal department. Accordingly, any executive with potential inside information should inform the legal department that it should veto any repurchases.