Reported by Matt Levine

(Summary version featured below. To read full report, go to: https://www.bloomberg.com/opinion/newsletters/2025-11-17/private-markets-are-the-new-securities-fraud?embedded-checkout=true)

Matt Levine argues that two long-running realities of U.S. finance are colliding: “everything is securities fraud” and “private markets are the new public markets.” Public companies face near-automatic lawsuits whenever bad news emerges, while private companies historically avoid that exposure by dealing only with sophisticated investors in discrete fundraising rounds. This litigation risk has been one quiet reason companies prefer to stay private, even as regulators look for ways to make public markets more attractive again.

The distinction, Levine explains, rests on who invests and how. Public markets involve retail investors who rely heavily on disclosures and can plausibly claim deception after the fact. Private markets, by contrast, involve large institutional investors expected to conduct deep due diligence and negotiate contracts that define their remedies. Because private shares don’t trade continuously, companies are less exposed to claims based on stray statements, interviews, or optimistic narratives.

That separation is now breaking down. Policymakers and asset managers are pushing private assets into retirement accounts and retail-friendly vehicles, meaning ordinary investors are increasingly exposed to private equity, private credit, and other alternatives. These investments arrive not in occasional negotiated deals, but through steady, automated contributions that resemble public-market participation. As a result, private markets are beginning to look—and legally feel—much more public.

Levine highlights academic work arguing that this “retailization” of private equity creates a major regulatory gap. Practices tolerated in institutional settings—rosy performance metrics, opaque fees, flexible valuations, limited liquidity, and waived fiduciary duties—become serious legal risks when marketed to everyday investors. Even without traditional public-company disclosure rules, private equity firms may face lawsuits under fraud, contract, consumer protection, fiduciary duty, and even classic securities-fraud doctrines like Rule 10b-5.

The punchline is that private markets may not escape the logic of “everything is securities fraud” after all. As private funds court retail capital, they invite the same litigation culture that defines public markets. The price of access to everyday investors may not be stricter disclosure alone, but a wave of lawsuits challenging whether private-market storytelling crossed the line into deception.