Read this if you are passive index fund investor, or if your pension fund is: No Votes, No Sales, No Suits (SpaceX) https://www.businesslawprofessors.com/2026/05/no-votes-no-sales-no-suits/
Traditionally shareholders have three powers: to vote, to sue, and to sell. "We’re about to see a great test of corporate theory: What happens when the residual claimants have no rights at all?"
(no vote) SpaceX will have dual classes of stock that will give Elon Musk voting control. Also, SpaceX will be incorporated in Texas, where it will take advantage of a Texas law where shareholder proposals require $1 million worth, or 3% of, the outstanding stock.
(no sue) With its Texas incorporation, SpaceX will be insulated from any lawsuit unless the shareholder
1. shows “fraud, intentional misconduct, an ultra vires act, or a knowing violation of law”
2. derivative lawsuits limited to shareholders who hold 3% of the stock ($52 billion at reported valuations?)
3. SpaceX requires individualized arbitration of securities lawsuits (the point of an arbitration provision is not to arbitrate, but to bar class actions)
(no sell) The NASDAQ 100 and the S&P 500, will change their rules to permit SpaceX to be added early, just five trading days before the major index rebalance. Index fund rebalancign is forced without traditional time for price discovery. Passive index fund investors, including pension funds are taken on the ride without any say. SpaceX is also using an accelerated tranche.
OpenAI, Anthropic IPO's are going to benefit from the same Index rules changes.
#investing #finance #law #spacex #markets #pensions
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