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To: SEC Chair Gary Gensler
Tell the SEC to Hold Massive Baby Formula Companies Accountable
This year, the biggest corporations are expected to spend a record $1 trillion on stock buybacks, shattering records and showering cash on shareholders — instead of investing it in product safety, innovation, or workers.
Regulators let Abbott Laboratories buy back more than $5 billion of its own stock while it covered up unsanitary conditions in its factory. In such a consolidated market, these conditions have contributed to a life-threatening baby formula shortage.
Corporate stock buybacks are bad for everyone but the CEOs and executives they enrich.
Why is this important?
What does financial regulation have to do with the baby formula crisis? More than you might think.
Just four companies sell almost all baby formula in the United States: Abbott, Reckitt Benckiser, Nestle, and Perrigo. This concentration in the industry leaves the supply chain vulnerable.
Abbott Laboratories, a $35 billion conglomerate, is under fire for manufacturing baby formula in dirty facilities that caused two babies to die of a bacterial infection and made at least two others sick. Now, one of the biggest factories in the country is closed while regulators work to ensure it’s free of contamination, which means desperate parents are driving hours just to find formula.
How did this crisis happen? One reason is that regulators let Abbott Laboratories buy back more than $5 billion of its own stock while it covered up unsanitary conditions in its factory. Instead of making sure their product was safe, Abbott’s executives lied to safety inspectors while spending corporate cash on pumping up its stock price.
Before 1980, corporations were outlawed from buying back their own stock — and there’s no good reason regulators shouldn’t outlaw it again. This year, the biggest corporations are expected to spend a record $1 trillion on stock buybacks, shattering records and showering cash on shareholders — instead of investing it in product safety, innovation, or workers.
The baby formula crisis should be the last straw. It’s sickening that Abbott would buy back stock instead of keeping babies safe.
Chair Gary Gensler at the Securities and Exchange Commission has the authority to slam the brakes on corporate buybacks. Chair Gensler is doing good work to rein in financial wrongdoing, but needs to hear from us that this is important.
Please help us send a message to Chair Gensler that corporate stock buybacks are bad for everyone but the CEOs and executives they enrich.