Courtesy of Pam Martens
Congresswoman Alexandria Ocasio-Cortez Cites WeWork as What Is Wrong With Private Equity Markets
By Pam Martens and Russ Martens
Yesterday the U.S. House of Representatives’ Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets held an extremely timely hearing titled: “Examining Private Market Exemptions as a Barrier to IPOs and Retail Investment.” The thrust of the hearing was the negative impact that the ballooning private equity market is having on the dramatically shrinking pool of publicly traded stocks and the good of society in general.
As the WeWork IPO train wreck plays out in the media, showing how two of the most sophisticated banks on Wall Street, JPMorgan Chase and Goldman Sachs, were set to bring this 9-year old office rental company to the public markets via an IPO, despite outrageous conflicts of interest by WeWork’s founder and CEO and a proposed valuation that turns out to have been off the mark by tens of billions of dollars, it was certain that someone was going to bring up WeWork at this hearing. That person was Congresswoman Alexandria Ocasio-Cortez of New York.
Ocasio-Cortez asked Duke University Law Professor Elisabeth de Fontenay, one of the witnesses who testified yesterday, about the kinds of protections retail investors would have if private equity markets were broadened to include retail investors. Professor de Fontenay explained that the small investor would rarely have access to audited financial statements, no ability to accurately assess the valuation of the company, and no information on any criminal investigations taking place – all of which is available for a publicly listed company.
Ocasio-Cortez then waved a news article bearing WeWork’s name and said “They had raised on a previous valuation of $47 billion and now they just decided overnight, just kidding, we’re worth $20 billion. They’ve cut it by over half. Correct?”
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