Warren Presses Index Providers on Rule Changes to Rush SpaceX Shares Into Americans' Retirement Accounts

Warren Presses Index Providers on Rule Changes to Rush SpaceX Shares Into Americans' Retirement Accounts

Index Firms' Rule Changes Could Rapidly Add SpaceX to Major Stock Indexes while Waiving Investor Protections

"(C)hanges may enable a scheme of financial engineering that rigs America's capital markets in favor of Mr. Musk and other SpaceX insiders."

Text of Letter (PDF)

Washington, D.C. - U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to S&P Dow Jones Indices CEO Catherine Clay, FTSE Russell CEO Fiona Bassett, Morningstar Indexes President Amelia Furr, and Nasdaq, Inc. President & CEO Adena T. Friedman regarding recent reports that the firms considered or have approved changes that could expedite the inclusion of SpaceX into their indexes, waiving typical safeguards that provide investor and market protection. Earlier this week, Ranking Member Warren called on the SEC to delay the SpaceX IPO until investors are protected.

"Traditionally, index providers - including your firms - have maintained rules for the inclusion of companies on their indexes, which are meant to protect passive investors and maintain the credibility of each index,"wrote Ranking Member Warren. "The changes to your index rules to accommodate these large companies, however, have the potential to destabilize markets and create significant risks for American investors, especially retirees and other individuals that rely on index funds for their savings."

"This wave of changes by your firms raise significant investor protection concerns, particularly amid reports that SpaceX lobbied for "quicker entry into your indexes,"" wrote the Ranking Member. "For the millions of Americans invested in index funds, the changes may lead to the automatic purchase of billions of dollars of SpaceX stock without them having any say in the matter."

"As one Financial Times commentator put it, "Why on earth is (S&P Dow Jones Indices) . . . seemingly flirting with a rule-bending change to allow Elon Musk's satellites-to-AI company a quick entry?" This is a question the SEC and the index providers should answer for the public," concluded Ranking Member Warren.

Ranking Member Warren requested answers from the index providers on their decision-making process and plans for these investments by June 26.

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