This week, S&P Dow Jones Indices closed a months-long review and left the rules for the S&P 500 exactly where they sat. The change it turned down would have let a giant new company skip the usual year-long wait, skip the test that says a company has to earn a profit before it joins, and land in the index within days of going public, no matter how little of its stock actually changed hands. SpaceX wanted that change. It filed its registration statement with the Securities and Exchange Commission on May 20, and it plans to start trading on Nasdaq on June 12 while running a net loss of close to five billion dollars over the past year and selling less than five percent of its stock to the public.
We have already seen what this rule does. The same profitability and seasoning test kept Tesla out of the S&P 500 until December 2020, years after it had become one of the most valuable companies in the country. The wait is the whole point. It makes a company prove it can earn money in public before anyone points the retirement savings of strangers at it. Most of us own this index without ever choosing it, because the money in a workplace 401(k) usually sits in a fund that tracks the S&P 500, and that fund buys whatever the index lists, with our paycheck contributions, at whatever the price happens to be that day. About thirteen trillion dollars runs on that autopilot. Had S&P bent the rule, the index would have ordered those funds to buy SpaceX at any price, on a sliver of trading shares, for a company deep in the red. Corporate-governance expert Nell Minow called that idea the opposite of what an index is supposed to do. S&P agreed with her, and kept the index a fair map of the market instead of a launch pad for one listing. It told SpaceX what it once told Tesla: get in line. That is a real win, and we should say so plainly.
A clean ruling on the rules still leaves the more difficult problem sitting in open view. While the banks market this offering, Elon Musk has been posting on X, the platform he owns, about a major computing deal with the company Anthropic, and he dropped a detail there that the official filing never mentioned. A securities law professor said on the record that the post appears to contradict the filing, and that the proper fix is to send a correction to the SEC. A company that tells the public one thing in a sworn document and something different on its founder’s website is doing exactly what securities law exists to investigate. Was this an error or a purposefully misleading statement meant to defraud the public? That’s what an investigation can determine through discovery, subpoenas, and eventually with warrants.
New York holds the sharpest tool in the country for this. A state law called the Martin Act lets the New York Attorney General investigate fraud in the sale of stock, and it lets the Manhattan District Attorney bring criminal charges under the same statute. This offering reaches buyers in New York, which hands both offices a clear reason to look.
Here’s what you can do to influence this situation in a way that brings the heat to Elon Musk.
Attorney General Letitia James runs the Investor Protection Bureau, which enforces the Martin Act, and it takes these calls at (212) 416–8222. A short version sounds like this.
My name is [your name], and I am calling as a member of the public. I would like the Investor Protection Bureau to open an inquiry into statements made around the SpaceX stock offering. SpaceX filed its registration statement with the SEC on May 20, and since then Elon Musk has posted details about a business deal on X that never appear in that filing. A securities law professor has said publicly that the posts appear to contradict the filing. I am asking the office to decide, under the Martin Act, whether anyone made intentionally false or misleading statements while marketing this stock. Thank you for your time.
District Attorney Alvin Bragg runs the office whose Financial Frauds Bureau handles securities matters, and it answers at (212) 335–8900. A short version sounds like this.
My name is [your name], and I want to flag a possible securities matter for the Financial Frauds Bureau. SpaceX starts trading on Nasdaq this month, and its founder keeps making public statements on X that a securities law professor says appear to contradict the company’s official SEC filing. Because this stock reaches buyers in Manhattan, I am asking your office to review whether anyone made false or misleading statements in connection with the sale, which the Martin Act treats as a crime.
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Good, I hope the bankrupt the poor slob ( I have worse names for this wannabe world ruler but I'm trying to clean up my act a little bit). Now, if we the people can get the courts to do their jobs?
Best news in what feels like forever at this point. F elon, I hope this ruins his month.