prior valuation date

[LIBERTYKID]

Privately held company is purchasing stock from terminated ESOP participants based on immediately preceding valuation date. The company is having discussions with a potential buyer re: its sale at a substantial premium to the prior valuation. The participants who terminate are not asking about whether the prior valuation is correct or the business prospects of the company. Should the company continue to buy stock from the terminated participants?

[RLL]

Hi JONB ---

The company should NOT continue to repurchase the stock at the old ("stale") valuation....unless it is willing to disclose the possible effect of its discussions with the potential buyer.

[LIBERTYKID]

What the employer may have to do is to stop the repurchase of shares for a period of time until the deal can be disclosed. What I am trying to come up with is any authority to stop the purchase fo the puts at this time. What gives the employer the authority to not purchase the shares at this time?

[RLL]

JONB ---

If the company continues to repurchase stock without disclosure of material facts, it would likely be violating antifraud provisions of federal and state securities laws.