Strongly Worded Letters

Saba Capital's Boas Weinstein sued 11 closed-end funds over a Maryland law that prevents shareholders owning more than 10 percent from voting their excess shares, a provision widely used as an anti-activist measure. Weinstein won at the lower court on the argument that the Maryland provision violated the Investment Company Act's one-vote-per-share requirement, but the Supreme Court reversed that ruling and shielded the funds without directly addressing his core argument. A separate court ruled there is no private right of action under the one-vote-per-share statute, meaning only the SEC can enforce it. Weinstein's firm responded by stating the decision places enforcement responsibility squarely on the SEC, though the SEC under Paul Adkins is occupied with other regulatory priorities, and Senator Elizabeth Warren separately sent the SEC a letter asking it to delay the SpaceX IPO on the grounds that the company is overpriced.

SpaceX effectively priced its IPO a week before the official date by setting a fixed price of 135 dollars per share and a fixed share count upfront rather than running a traditional book-building process. At the time of recording the deal was roughly four times oversubscribed on the institutional side and had attracted approximately 100 billion dollars of retail demand. Prediction markets were trading SpaceX at roughly 20 percent above the IPO price, though those markets are not open to US customers because single-stock futures fall under SEC rather than CFTC jurisdiction. Some retail investors quoted in Bloomberg said things like there is no such thing as too much SpaceX investment and one admitted he knows he is overpaying but wants to participate in the culture, which the speakers identified as a clearer signal of meme stock behavior than fundamental arguments.

S&P conducted a formal consultation on waiving its profitability requirements to admit SpaceX to the S&P 500 faster, and Bloomberg Intelligence ETF contacts placed roughly 75 percent odds that S&P would grant the waiver, but S&P decided not to waive the requirements. Because the profitability rule demands approximately four profitable quarters, SpaceX index inclusion could be years away. The divergence between S&P and other index providers that had relaxed their rules means the S&P 500 and the CRSP total stock market index could have wildly different performance over the next one to five years. A practical constraint is that SpaceX is only floating roughly 4 percent of its stock, meaning S&P could not physically accommodate index demand even if it wanted to. Active managers benefit from SpaceX remaining outside the index because any manager who did not own it after inclusion would effectively be short SpaceX, creating career risk.

SpaceX's governance structure gives Elon Musk super voting stock and board control and effectively eliminates shareholder ability to sue for breach of fiduciary duty. New York City Comptroller Mark Levine issued a statement saying the city would try to stop SpaceX from disempowering shareholders, but the governance structure closes off proxy fights and lawsuits, leaving only strongly worded letters as a practical tool. OpenAI and Anthropic may adopt similar governance structures if they go public, asking shareholders to trust management with minimal accountability. The narrative of companies staying private forever has reversed, driven in part by the need for enormous capital expenditure for data centers, with S-1s filed in some form by both Anthropic and OpenAI.

The CFTC released its first proposed rules on sports betting, triggered in part by Kalshi's argument that CFTC regulation preempts state gaming laws, which courts have mostly accepted, allowing bets in states that forbid sports gambling and to 18-year-olds. The proposed rules ban betting on pre-collegiate sports on grounds that results are susceptible to manipulation, ban injury contracts because players, doctors, and team staff would have material non-public information, and ban contracts on brawls or fights outside of boxing to prevent people from starting altercations to win bets.

The CFTC has a longstanding rule against assassination markets, and its position is that any contract settling on whether a world leader is out of office by a certain date is covered by that rule if assassination is among the pathways by which the settlement condition can be satisfied. Polymarket had a contract on whether Ali Khamenei would be out of office as Supreme Leader of Iran, and when he was killed Polymarket declined to pay out and instead refunded participants, treating it retroactively as an assassination market. The speakers noted the CFTC has not thought through how the rule applies to benign contracts where assassination is a theoretically possible but clearly unintended resolution pathway, and predicted future cases where contracts not obviously involving assassination will turn out in hindsight to qualify under the framework. The SEC also issued a major revision to equity market microstructure rules, including eliminating the trade-through rule.