Last I checked, being up shit creek without a paddle isn’t illegal.
The problem with criminalising stupidity is differentiating genius and idiocy is often only possible ex post facto. We let investors take informed risks with their own capital. The SEC’s main job is making sure companies selling securities truthfully represent themselves.
There are many business models I never thought would work but which, due to scale, clicked. I’m sceptical about WeWork. But the way for them to die is for them to starve to death. If the Saudis (and Kazakhs?!) want to give them money, so long as they aren’t creating negative externalities, I don’t see the problem.
The SEC used to prevent companies from listing that were obvious scams. They simply need to start doing their jobs again, it's not a tricky differentiation problem or moral quandry that we need to bust out latin to explain.
The VCs went into this with their eyes open and probably information rights.
The public has been told this stock features a CEO who scammed his own company out of licensing fees for the name, and features abundant self-dealing for leases of buildings he owns. Anyone who invests has been warned.
It's a despicable fraud and would be completely illegal if we had a functional SEC. They are just amping up the Uber-style con game to the next level.
There will be dozens more scam companies like this until someone finally cracks the whip, so get used to it.