Comment by ptsneves

Matt Levine wrote that flouting the rules could be fine if there were market alternatives (he said otherwise it would be a market failure). I am pretty sure there would be market alternatives appearing, at least in the ETF tracking space, and that would erode the brand.

It would be a bad show to have SP500 (cheating rules) underperfoming SP500(proven rules). It would also be a bad show with many financiers and even influencers calling out the corruption.

I for one would be advising newer investments in the proven rules ETF trackers. I also think there might be lawsuits from people who had contracts tied to the old rules. After all if you need to sell to transfer to another vehicle there might be tax consequences.

PS: It is a shame that multiple classes of, non floating, controlling stock do not cause penalties in terms of market cap weight. I will research the issue. I know an ETF is not an index, but the relationship is tight enough for practical reasons.