Capitalism is a simple bargain: you provide cash and in exchange you receive a share of ownership. Owning property comes with rights, the right to vote on who will represent you on the board of directors, the right to request and receive information needed to decide if you want to sell or buy more shares, and the right to have a dialogue with management to raise material concerns that affect the value of your asset.
This implicit bargain fueled the greatest engine of wealth creation in human history. However, under the current Administration, the “capital” is being stripped out of capitalism.
In a recent conversation with Reuters, I warned that the White House and the SEC are effectively disassembling the machinery of our public markets. By threatening to roll back Regulation S-K, refusing to adjudicate shareholder resolutions, not allowing shareholders with less than $5million to file exempt solicitations, and not requiring disclosure of material risks, they are transforming public corporations into private fiefdoms with no accountability. The Administration is telling owners of capital—you, me, retirees, pension funds, and endowments—that we have no recourse. We are expected to write checks and not ask questions.
These unprecedented moves amount to a seizure of our property rights. It is blatant anti-capitalism.
When you buy a home, you have the right to inspect the foundation. If the government suddenly passed a law saying you were forbidden from asking if the house was built on a sinkhole, you would rightfully call it a violation of your property rights. Yet this is exactly what is happening to our investment portfolios.
When the SEC tells shareholders we can no longer ask about supply chain challenges, workforce instability, basic governance, or explain to fellow investors the financial rationale for filing a shareholder resolution, they blindfold investors to material risk and from meeting our fiduciary duty.
Let’s call this attempt to keep shareholders in the dark what it really is: the imposition of systemic ignorance.
Information is the lifeblood of efficient markets. Investors need data to price risk. If a company relies on a supply chain vulnerable to extreme weather, or if it creates a work culture that alienates employees, that is not “political” information—that is material financial information. When the government abets irresponsible companies in suppressing these financial risks to shareholders, they are not protecting companies; they are incubating a calamitous collapse because you cannot manage a risk that you are not allowed to measure.
Ironically, an Administration that claims to champion free markets is actively undermining the free flow of information that makes markets work. By insulating management from shareholder oversight, they are recreating the conditions of 1929—a market built on opacity, speculation, and insider control.
We are already seeing the consequences. As U.S. markets become black boxes, smart investors are looking elsewhere. Europe and other global jurisdictions recognize that in modern capitalism, transparency is a competitive advantage. If the U.S. persists in a race to the bottom, the capital will inevitably follow.
Investors are not out to score political points. We want a return on investment. Getting there is exponentially more difficult if the rules of ownership are rewritten to exclude owners.
The best management teams value shareholders and will continue to voluntarily measure and address relevant risks and offer material disclosures. Other companies, choosing to get away with whatever they can, will ghost shareholders and barricade themselves with no oversight, breaching the trust that underpins free markets. This bifurcation between companies that value investors and those that do not will determine which public companies succeed and which fail over the long term.
It is time for the investment community—from the largest asset managers to individual 401(k) holders—to demand that the SEC, the agency created to protect us, restore our fundamental rights. We must raise our voices to remind politicians in Washington that money goes where it is respected, and that there is no capitalism without capital.
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