GM suspends stock purchases in employee plans

[Hurricane]

GM suspends stock purchases in employee plans
Tuesday September 30, 7:09 pm ET
GM suspends stock purchases by employee 401(k) plans after workers buy all available shares

DETROIT (AP) -- General Motors Corp. said Tuesday it has suspended employee stock purchases through two 401(k) programs because workers have bought all the available shares.
GM said in a regulatory filing that the suspension "is the result of recent unexpectedly high demand among the plans' participants due to increased employee interest and a lower market price for the common stock."

The filing did not give the number of shares the employees purchased, but said GM stock purchases within the plans would be halted until GM files a statement with the Securities and Exchange Commission to register additional shares. The company said it expects to file that during the week of Nov. 9.

Until then, investments of employees who have elected to buy GM shares will go into other funds, according to the filing.

The filing also said GM notified its directors and executive officers that they cannot buy or dispose of any GM equity securities that were acquired in connection with their employment. The Sarbanes-Oxley Act generally prohibits directors and officers from trading in their company's stock when most participants in the company's stock plans are not able to purchase or sell stock.

GM shares closed Tuesday at $9.45, 78 percent below their 52-week high of $43.20. The shares rose 94 cents, or 11 percent, Tuesday after plunging nearly 13 percent to $8.51 Monday. Adjusted for splits and other changes, that was the stock's lowest price since June 10, 1954, according to the Center for Research in Security Prices at the University of Chicago.

More here: http://biz.yahoo.com/ap/080930/gm_em...tock.html?.v=1

[Laffer98]

I thought in a free market economy demand would dictate price. What's wrong with GM's stock price if demand is so high they have no stock left to tender to people who want to purchase it? Someone on this board needs to enlighten me?

[joemac]

The ESPP program ran out of shares because the allotment for the program ran out of shares. Obviously GM employees have upped their contribution percentages in the program significantly. After all you buy stock when it's low or on bad news, and sell when it's high or on good news.

[MOGI]

Originally Posted by Laffer98

I thought in a free market economy demand would dictate price. What's wrong with GM's stock price if demand is so high they have no stock left to tender to people who want to purchase it? Someone on this board needs to enlighten me?

speculation...employees have an optomistic outlook for GM, or they figure how widely the price has been fluctuating recently that it's likely to shoot up at which point they can sell it off.

Plus, if I'm not mistaken, in these types of offerings, the stock is dicounted...

[osv_alero]

GM employees must have some strong feelings about the turn around program underway at GM.

Maybe those outside of GM will consider this and purchase more GM stock.

[Inchworm]

Many GM employees have regular contributions from their paycheck taken out to buy stock in the savings program. It is a consistant dollar amount. If the share price is down, the same dollar amount buys more shares. GM allocates a certain number of shares for the savings program. Those shares have been purchased. When they allocate additional shares, the program will resume.

[jbernie]

Originally Posted by Laffer98

I thought in a free market economy demand would dictate price. What's wrong with GM's stock price if demand is so high they have no stock left to tender to people who want to purchase it? Someone on this board needs to enlighten me?

Maybe something more along the lines of they ESPP acquired a certain number of shares for use with the program and all of those stocks have been purchased.

Not sure how these plans acquire the stock but possibly not from the open market, GM may have some kind of entity set up and they issue shares to it or something.

[Ambalanche]

http://www.autoblog.com/2008/10/04/c...ock-purchases/
Guess at this price they are afraid some line worker might buy enough shares to be able to fire somebody!

[Buickman]

simply ran out of shares in the program, more to follow. a non event.