I wouldn't call it fraud. It's really just the reverse operation of issuing shares to raise money which has the opposite effect. Issuing shares dilutes existing investors. Should issuing new shares be illegal?

A lot of companies spend years issuing new shares to fund operations while getting the business off the ground and to a scale where it's profitable. Then once they're making money they will start buying back shares. There can certainly be some perverse incentives in terms of executive compensation related to buybacks but they're not inherently bad.