Comment by d--b
14 hours ago
Wow, didn’t know that.
If SpaceX tanks and 401ks are left holding the bag, this could result in the biggest class action lawsuit ever.
14 hours ago
Wow, didn’t know that.
If SpaceX tanks and 401ks are left holding the bag, this could result in the biggest class action lawsuit ever.
Oh, SpaceX already has that covered: thanks to the TX legislature, SpaceX shareholders cannot file shareholder lawsuits, you can only complain to the "Texas Business Court" or get binding arbitration [0].
[0]: https://www.bloomberg.com/opinion/newsletters/2026-05-21/spa...
People can surely sue the index publishers for removing the safeguards, or the index funds to take more risks than they were mandated.
When money is lost in the order of billions, someone is getting sued.
> someone is getting sued.
but that doesnt mean any money gets recovered at all. Musk sure as hell aint giving anything back.
The fix is to simply not buy it - those 401k aren't completely passive, you can choose a different investment (instead of NASDAQ index).
Will take 6+ years and lots of fees lost to recover loss. Won't be anywhere close to made whole.
> People can surely sue...
Would either published indexes or investment funds exist, if suing them for poor performance was anything resembling that easy?
I'm thinking "no".
This is optimistic about binding arbitration providing protection from more traditional remedies
why? the cards are on the table. If you buy a turd from me after I disclose the composition, that is on you
Indeed. Everyone should be moving their funds out of target date funds right now and into medium and small cap stock funds.
It's quite sad that the pillar of American life that is the 401k is given to shady fund managers. The law should be that if you manage a 401k you must be a fiduciary. If that were the case then no one would be bag holding these fake valuations because they'd be liable for negligence. Right now they're just in on the scam.
The small mid caps are precisely what will get sold down here…
You can't sell these ETFs without incurring capital gains, potentially large. So it isn't really a choice.
If it's actually your 401k, sure you can. Just today I rebalanced my retirement funds away from large cap stocks to avoid this steaming turd that Elon is dumping on the public.
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If you're truly convinced there's nefarious reasons for including megacap IPOs in passive index, you can always short the stock (or use derivatives) by the same amount.
I'm not sure you'll come out ahead. (Personally I don't get the outcry, except for nasdaq which has fairly stupid rules, delaying the inclusion of megacaps won't make the problem go away, but probably increase since the float will be massively larger). It's inherent to being a passive index.
How is that their problem? That is an issue between you and the government.
Sure, the problem is trust.
Regular people want to invest so they can make money and companies want people to invest so that they can raise money. So pretty much everybody wants the 401k money to be invested in the stock market.
But the issue is that investing in the stock market is very technical, so some smart asses invented the index funds to make it easy for daddy and mummy to put their retirement accounts to work.
The index has safeguards in place to try and reduce its volatilty. So people are happy, cause they are investing in stock without having to look closely at what it is they bought.
But if suddenly some people change the safeguard rule, so that their buddy can dump their overvalued stock over people who think they are investing relatively safely, then it can be argued that there is foul play.
People are not finance specialists and they are heavily incentivized to buy index funds, so they need to trust that the people who are telling them to invest are not hiding things from them. If that trust is broken, lawsuits will follow.
It’s like: imagine you own a Toyota and have a maintenance contract with Toyota, and one day you have your car serviced and they tell you they changed the brakes. They tell you the brand of the new brakes and they tell you it’s fine while in fact, they put some cheap garbage that fail after 100 km of driving.
When the brakes fail and your car falls off a cliff, you go and see them and they tell you: “yeah those brakes were bad, but we told you we put them in, you could have looked up that these were bad, it’s all over the internet, so that’s on you”.
> People are not finance specialists and they are heavily incentivized to buy index funds, so they need to trust that the people who are telling them to invest are not hiding things from them. If that trust is broken, lawsuits will follow.
A "lawsuit" isn't a concern for the likes of Musk.
He's got the money to pay lawyers, politicians, and influencers. He's spread this risk around to the right people; if he goes down, they're going down with him, too.
At a certain point you have to start jailing people for long periods of time. I don't mean the Milken, Belfort, or Skilling treatment. I mean being placed away for 30+ years in medium-security facilities at the least.
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