Show an ad over header. AMP

I am the FIRST

Warren broadsides private equity following stock market volatility

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.

4 ffp

Why the startup world needs to ditch "unicorns" for "dragons"

When Aileen Lee originally coined the term "unicorn" in late 2013, she was describing the 39 "U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors."

Flashback: It got redefined in early 2015 by yours truly and Erin Griffith, in a cover story for Fortune, as any privately-held startup valued at $1 billion or more. At the time, we counted 80 of them.

Keep reading... Show less

Scoop: Facebook's new moves to lower News Feed's political volume

Facebook plans to announce that it will de-emphasize political posts and current events content in the News Feed based on negative user feedback, Axios has learned. It also plans to expand tests to limit the amount of political content that people see in their News Feeds to more countries outside of the U.S.

Why it matters: The changes could reduce traffic to some news publishers, particularly companies that post a lot of political content.

Keep reading... Show less

Scoop: Amazon quietly getting into live audio business

Amazon is investing heavily in a new live audio feature that's similar to other live audio offerings like Clubhouse, Twitter Spaces and Spotify's new live audio platform, sources tell Axios.

Why it matters: As with Amazon's efforts in podcasting and music subscriptions, the company sees live audio as a way to bolster the types of content it can offer through its voice assistant, Alexa, and its smart speaker products.

Keep reading... Show less

Hurricane Ida exposes America's precarious energy infrastructure

The powerful hurricane that plunged New Orleans into darkness for what could be weeks is the latest sign that U.S. power systems are not ready for a warmer, more volatile world.

The big picture: “Our current infrastructure is not adequate when it comes to these kinds of weather extremes,” Joshua Rhodes, a University of Texas energy expert, tells Axios.

Keep reading... Show less

"We must go further": 70% of adults in European Union are fully vaccinated

About 70% of adults in the European Union are fully vaccinated against COVID-19, Ursula von der Leyen, the president of the European Commission, said Tuesday.

Why it matters: The milestone makes the E.U. one of the world's leaders in inoculations, after an initially lagging vaccine campaign, the New York Times notes.

Keep reading... Show less

What Elizabeth Holmes jurors will be asked ahead of fraud trial

Jury selection begins today in USA v. Elizabeth Holmes, with the actual jury trial to get underway on Sept. 8.

Why it matters: Theranos was the biggest fraud in Silicon Valley history, putting both hundreds of millions of dollars and thousands of patients' health at risk.

Keep reading... Show less

Insights

mail-copy

Get Goodhumans in your inbox

Most Read

More Stories