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Sen. Elizabeth Warren (D-Mass.) Photo: Scott Olson/Getty Images

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.

Go deeper

Dion Rabouin, author of Markets
Feb 1, 2021 - Economy & Business

Why GameStop's stock could rise much, much higher

The meteoric rise in GameStop's stock price is being called a short squeeze by most but that's not what's happening, says an expert on short interest and the market.

Why it matters: That could mean that if and when the short squeeze does come, GameStop's price could soar significantly higher than its current levels.

Dave Lawler, author of World
37 mins ago - World

Americans increasingly see China as an enemy

One in three Americans, and a majority of Republicans, now view China as an enemy of the United States, according to a new survey from Pew Research Center.

By the numbers: Just 9% of Americans consider China a "partner," while 55% see Beijing as a "competitor" and 34% as an "enemy."

Scoop: Leaked HHS docs spotlight Biden's child migrant dilemma

A group of undocumented immigrants walk toward a Customs and Border Patrol station after being apprehended. Photo: Sergio Flores/The Washington Post via Getty Images

Fresh internal documents from the Department of Health and Human Services show how quickly the number of child migrants crossing the border is overwhelming the administration's stretched resources.

Driving the news: In the week ending March 1, the Border Patrol referred to HHS custody an average of 321 children per day, according to documents obtained by Axios. That's up from a weekly average of 203 in late January and early February — and just 47 per day during the first week of January.