Sen. Elizabeth Warren said the Securities and Exchange Commission should delay SpaceX’s IPO to ensure the Elon Musk-led company won’t put investors at risk.
“The massive size of the SpaceX IPO alone, under normal circumstances, would justify careful SEC review and attention to investor needs,” Warren wrote to SEC Chairman Paul Atkins in a letter that her office published on Wednesday.
“But these are not normal circumstances: a number of additional factors exacerbate concerns and require action by the SEC to meet its investor protection and market integrity mandates by delaying the IPO,” the Senator wrote.
SpaceX is set to debut on the Nasdaq Friday morning, leaving Atkins and the SEC little time to address Warren’s concerns. SpaceX is set to go public at a valuation of around $1.77 trillion, which would make it one of the most valuable companies in the world despite not being profitable.
The former presidential candidate and top Democrat on the powerful Senate Banking committee raised particular concerns about how major indexes have recently changed their rules or at least considered changes, which allow for SpaceX’s inclusion on a faster timeline.
“The SpaceX IPO creates a new concern: that major stock market indexes are being rigged in a way that would force millions of investors in passive index funds — a generally lower cost investment option that can be attractive to retail investors — to invest in SpaceX and face exposure to SpaceX’s significant risks with no choice in the matter,” Warren wrote in the letter, which is dated June 9.
It’s unlikely that Warren’s request will result in a halting the IPO. The Massachusetts Democrat has frequently used her perch to frequently pressure leading CEOs. Nvidia CEO Jensen Huang recently declined her invitation to testify before the Senate about the company’s business in China. While Warren can request information, she would need at least some Republican support to enforce compliance with her requests or in this case the help of Atkins, a Trump appointee.
Atkins, who has confirmed via a party-line vote, has previously said that one his goals as chairman is “to Make IPOs Great Again.” A spokesperson for the SEC confirmed that it received Warren’s letter but declined further comment.
The Nasdaq 100, which tracks 100 of the largest Nasdaq-listed non-financial companies, finalized rules on May 1 that will allow for “fast entry” for large IPOs. Other indexes, including S&P 500 (SPY) and Russell 1000 (IWB), have passed rule changes or considered them ahead of SpaceX’s IPO. Earlier this week, the S&P and Dow Jones Indices committee said it would not be changing its index inclusion rules to fast track entry for SpaceX and other mega IPOs.
In addition to concerns about the indexes, Warren also said that SpaceX’s valuation “requires numerous leaps of faith” to justify the company’s valuation and includes “a non-traditional governance structure” that gives Musk “an unprecedented level of power.”
SpaceX’s IPO is expected to be the largest in history and comes as both Anthropic and OpenAI, which are competing with SpaceX’s xAI, are moving toward their respective IPOs.
A representative for SpaceX did not immediately respond to a a request for comment from Business Insider.
You can read the full letter below:
