Scott Flesch Quoted on Executive Order Banning Stock Buybacks
Subtitle
"Stock Buyback Ban Could Shrink Defense Industrial Base"
Law360
Scott Flesch commented on President Trump's January 7 executive order barring defense contractors from buying back stock or issuing shareholder dividends if they are deemed to be underperforming on their contracts. Flesch questioned whether the order would meaningfully improve contractor performance, expressing skepticism that it would be more effective than existing enforcement mechanisms. He noted that "underperformance is not defined" and described the order as "an extremely subjective allowance of authority." Flesch added that the policy "stands in stark contrast" to recent efforts aimed at streamlining the acquisitions process and warned that it may create "a disincentive for companies to consider contracting with the Department of War in the future." He also observed that, because "this is only an executive order," its enforceability without accompanying formal regulations may be subject to challenge.