Private equity has once again found itself in the crosshairs of Sen. Elizabeth Warren (D-Mass.), this time for "treating the stock market like a casino."

What she said: Warren's broadside was part of a letter sent Friday to the SEC, asking it to investigate and provide more information on how it plans to address the recent stock market volatility, related to shares of GameStop, et al.

• The overall letter deserves plaudits for its balance, expressing concerns about possible market manipulation on both sides of the trades, rather than falling too far into the reductionist narrative of Reddit David vs. the Goliath of Greenwich.
• At the very least, Warren correctly points out that none of us really know the buy-side composition.

But then she lists "private equity" first among those allegedly distorting the securities markets, ahead of hedge funds and other investors. Even though private equity, by definition, doesn't participate in short-term public equities investing.

• Caveats: Yes, some private equity firms also manage hedge funds. Plus, there's been a recent spate of "private investments in public equity" (PIPEs) — mostly tied to the SPAC boom, as well as some pandemic rescues like Silver Lake's deal for AMC Entertainment (which obviously is relevant, but not as either a short or momentum play).

Why it matters: Her argument doesn't make much sense. And, by making it, Warren slanders private equity and dilutes her more legitimate criticisms of its actual practices — just as she's in the Senate's majority party for the first time in six years.

The bottom line: What's happened over the past week has caught the national attention unlike any other macro business story in recent memory, brutally exposing some structural weaknesses of modern capitalism. But creating villainous strawmen does little to remedy the problems or inform the public.