In fact, Musk’s critics had already dialed up the outrage in the weeks before the S-1 was filed. In a letter to Musk and his two top lieutenants on May 13, the California Public Employees’ Retirement System (CalPERS), and the Controllers of New York City and State, charged that the registration statement “would constitute the most management-favorable governance structure ever brought to the U.S. markets at this scale.”

Those interviewed by Fortune avow they’ve never witnessed anything this one-sided. “It’s crazy,” says Joseph Lucoski, founder and managing partner of securities law firm Lucoski, Brookman, LLP. “I practice every day with the exchanges and regulators, and they would never accept this onerous and one-sided a structure for an emerging growth company. Normally, you’d see a lot of pushback. But because it’s Musk, and the biggest IPO ever, and that everyone’s vying to get a part of it, the exchanges are going along with it. It would never happen in my world.”

The public funds from New York and California are lodging a long-list of complaints

Indeed, the offering—slated for listing on the NASDAQ—is expected to raise around $80 billion, and give the satellite and rocket colossus a market cap in the $1.5 trillion range, both all-time records for an IPO. But for the public fund managers overseeing over $1 trillion in assets for the likes of police officers, firefighters and nurses, the enterprise that promises to establish colonies on the moon and orbital data centers powered by solar panels also threatens a huge setback in shareholder rights. In the letter, CalPERS and the two New York officials provide a detailed critique of a half-dozen, allegedly Musk-serving rules all that if they weren’t advanced, would have to be invented as the antithesis of sound corporate oversight.

The controllers and CalPERS sent their objections before the S-1’s release, based on media reports of the governance rules it contained. As it turns out, every one of the provisions they cited and skewered appears in the registration statement issued the evening of May 20. As the investment officials feared, the SpaceX charter indeed calls two classes of shares: Class A for regular investors, and Class B awarded a small group of insiders. Class B would enjoy super-majority rights by carrying ten votes a share vs. one vote for the Class A holders. That arrangement would give Musk 79% control, despite owning 42% of the equity. The letter maintains that such an arrangement blatantly violates the “one share, one vote” principle that’s the “hallmark of sound corporate governance.” Put simply, the shareholders carry most of the economic risk while Musk gets to silence their voice in how SpaceX gets run.

The dual class system stipulates that only a vote of the B shares can remove Musk from the CEO or Chairman roles or from the board. The catch: Musk controls those ballots, so as the letter points out, “as a mathematical matter” he can only be fired if he votes against himself. In addition, Musk’s ownership of over 50% of SpaceX’s shares gives him the right to choose something called “controlled company status,” and as the S-1 states and the fund overseers predicted, Musk adopted that designation. That regime allows Musk to bypass appointing a majority-independent board or nominating or comp committees, “all while serving as CEO and CTO, as well as chair, the letter states, adding that It’s an extra layer of “insulation of accountability unheard of [from] any other large U.S. issuer.”

Still another dreaded shield: Musk’s picked a legal process, recently allowed as an option by the SEC, where all shareholder claims must be settled by mandatory, binding arbitration. As the letter states, “To our knowledge, no major U.S. issuer has previously adopted such a position for a public offering.” The rub: Shareholders are banned from bringing all lawsuits in federal court, whether class action claims from groups of small investors, or those initiated by the likes of CalPERS, the New York pension plans, or large hedge funds. In effect, mandatory arbitration eliminates, as the letter says, “the lawsuit structure essential to remedying widespread harms and shields the company from the deterrents of sound judicial review,” causing “a meaningful diminution of legal rights ordinarily attached to a public security.”

In the S-1, SpaceX acknowledges the barrier it’s erected for investors: “The [mandatory arbitration] provisions could limit our shareholders’ ability to pursue certain claims and increase the cost of doing so.”

Avows Adam Moskowitz, a leading class action attorney who’s won judgments totaling in the multi-billions of dollars against financial institutions and big-name industrial enterprises such as DuPont,”The statistics show that mandatory arbitration cases are settled overwhelming in favor of the company. It’s a rigged fight for the shareholders, as if the company were paying the refs in a football game, you’re playing in their stadium, and they’re putting your team in a rundown locker room. It takes years, and you don’t win. This gives SpaceX the ability to get away with just about anything.” He also notes that the arbitration also eliminates the appellate review, which is a steadfast pillar of the American judicial system.

In 2024, SpaceX re-incorporated from Delaware to corporate-friendlier Texas. It’s operating under a new Lone Star State code that increases, as the letter puts it, “procedural hurdles to initiate tender offers, proxy contests, or shareholder proposals,” making it extremely difficult, for example, for activists who rally the rank-in-file in a campaign to remove directors or officers. As the Empire and Golden State honchos fretted, SpaceX also changed its bylaws to ban any shareholder owning less than 3% of total shares from filing a “derivative action,” where shareholders sue directors for, as an example, gross mismanagement. The awards go back into the company’s coffers. The 3% rule occupies the same zone of absurdity as the rule effectively mandating that only Musk can fire Musk. At the expected valuation, those holding at least $45 billion in shares could sue. That means only Musk himself would likely own enough stock to file a derivative suit, when as a director and Chair, he’d normally be the target of the action.

Lucoski still believes the SpaceX IPO will greatly boost the prospects for innovative new companies going forward, despite the weaknesses on the governance front. “The broader story is that this will create a bullish effect that will embolden investors to back smaller companies vying to go public,” he says. “It’s bringing tremendous excitement and buzz to the tech space.” Still, he’s concerned about the mom and pop crowd that’s so entranced that they’ll come rushing in when the IPO bell rings, and then watch the prices of their shares wildly zig-zag in the days ahead. “The 80-year old dad of the lady who cuts my hair called to tell me he wanted to buy SpaceX stock and asked if he thought I should. There’s a big disconnect between what investors like the 80 year old dad see on TV and the risks in the market.” Compounding those dangers may be a shocking lack of the classic safeguards that traditionally protect investors wowed by Musk’s magic.