Musk has been accused of trying to funnel American pension funds into SpaceX
This is reported by Raw Story.
Financiers, investors and representatives of pension funds in the US have criticised the possible accelerated inclusion of SpaceX in major stock market indices following the company’s IPO.
The main complaint from critics is that if SpaceX is quickly included in key indices, passive investment funds will be forced to automatically buy its shares. Among such funds are pension funds, which hold the savings of millions of Americans.
In other words, this is not about taking money directly from people, but about how indices work: if a company is included in an index, the funds that track that index buy its shares automatically.
Why the scandal arose
According to media reports, FTSE Russell has simplified the rules for including large companies in US indices. Now, following an IPO, a mega-company can be included in an index just a few days after trading begins, provided it meets the requirements.
Critics believe that such changes could play into SpaceX’s hands. Elon Musk’s company has long been regarded as one of the most anticipated candidates for an IPO, and its potential valuation could make it one of the world’s largest public companies.
But this is precisely what worries opponents of the idea. They fear that pension funds will start buying SpaceX shares not because they have carefully assessed the risks, but because they will be obliged to follow the index.
What pension funds don’t like
Reuters previously reported that pension fund leaders in New York and California have spoken out against SpaceX’s potential governance structure.
Among the concerns are the potential for excessive control by Elon Musk, the limited influence of ordinary shareholders, super-voting shares and restrictions on legal protection for investors.
For pension funds, this is a matter of principle: they manage the money of teachers, firefighters, police officers, civil servants and other workers. Therefore, their representatives are demanding that SpaceX have a transparent governance structure and proper safeguards for shareholders before going public.
Why are pension funds being discussed?
Critics argue that including SpaceX in the indices could effectively drag Americans’ pension savings into a risky asset.
If SpaceX turns out to be overvalued, loss-making or has a weak corporate governance structure, the losses could fall not only on retail investors but also on those linked to the company through pension index funds.
Some investors call this arrangement dangerous because the risks of a private company following an IPO can quickly be passed on to a wide range of passive investors.
What SpaceX supporters say
Musk’s supporters believe that SpaceX could become one of the world’s most valuable companies after going public.
They point to Starlink, space launches, military contracts, satellite infrastructure and the company’s role in the global space industry.
In their view, if SpaceX does indeed go public and meets the requirements of the indices, its inclusion in them would be a logical reflection of market reality.
What is the main risk
The main debate now is not just whether SpaceX is successful as a technology company.
The question is this: should pension funds automatically buy the company’s shares immediately after the IPO, when there remain questions regarding its valuation, management, profitability and Musk’s control?
This is why critics are talking about an attempt to funnel Americans’ pension money into SpaceX. Formally, this may look like ordinary index investing, but in reality, it amounts to shifting the company’s risks onto millions of ordinary people.
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