Business
Commentary: Trump wants you to invest your 401(k) in crypto and private equity. Should you bite?
Trump is opening the door to risky ‘alternative investments’ such as crypto and private equity in 401(k) plans. But employers have had good reasons to keep them out of their plans.
If you believe Labor Secretary Lori Chavez-DeRemer, American 401(k) accounts are about to get much better.
Thanks to President Trump’s “bold new vision of a new golden age for America,” Chavez-DeRemer wrote in the Wall Street Journal on March 30, her agency is taking steps to open these crucial retirement accounts to a raft of new investment options, such as cryptocurrencies and private equity funds.
Her goal, she wrote, is to “unwind regulatory overreach and litigation abuse that have stifled innovation.” Her instrument is a proposed regulation that in effect would provide a safe harbor for plan sponsors — that is, employers — to offer those options in their employees’ plans without risking lawsuits or government scrutiny over whether they’re sufficiently prudent for workers to choose.
We have seen a number of proposals from private equity funds where the returns are really not calculated in a manner that I would regard as honest.
— Warren Buffett (2019)
Notwithstanding Chavez-DeRemer’s assertion that this change would be all to the good for workers, the truth is that she and Trump are acting at the behest of alternative investment promoters, who have long slavered for access to the nearly $14 trillion in assets held in 401(k)s and other such defined contribution retirement plans.
Far be it for me to offer anyone investment advice. But there are a few things that Trump and DeRemer aren’t telling you about these proposed new options. Namely, the dangers they present to unwary small investors.
The first clue that something is being hidden appeared in DeRemer’s op-ed, in which she blamed “Washington bureaucrats” and “plaintiff lawyers” for stifling the financial innovation that people supposedly have been clamoring to put in their retirement accounts.
You know who rails against “Washington bureaucrats” and “plaintiff lawyers”? Businesses that are fearful that government regulators and juries will clamp down on their wrongdoing. These critiques are often described as efforts to get government off the backs of the people. What they don’t explain is that once government has climbed off, big business will saddle up.
(As I’ve reported, among the businesses that have recently been demonizing plaintiff lawyers is Uber, which is pushing a ballot measure in California that would all but shut the courthouse doors to some passengers injured during Uber rides.)
So let’s examine the unacknowledged issues with “innovative” alternative investments. Private equity firms are known for buying companies that are either held privately, or are public companies due to be taken private. In many cases, they turn profits for their investors by cutting payrolls and reducing services at their portfolio companies, then draining what’s left until there is nothing left. Cryptocurrencies, as I’ve written, are a scam all their own.
We’ll start with the implicit and explicit rules guiding employers when they decide what investment choices to offer workers in their 401(k)s.
“Employers are fiduciaries, which means they must make decisions about retirement investments that are in their employees’ best interest,” observes Eileen Applebaum of the Center for Economic and Policy Research. “They must be prudent in curating a menu of retirement plan options for their workers. And they have been successfully sued for lack of prudence by workers whose retirement accounts held high fee, illiquid, risky investments that failed to perform.”
The fiduciary standards are developed in part by government bureaucrats. And the successful lawsuits? They’re brought by plaintiff lawyers.
In 2021, the Biden-era Labor Department warned that most sponsors of 401(k) plans and other defined contribution plans “are not likely suited to evaluate the use of [private equity] investments” in those plans. The administration shied away from outlawing such investments outright in 401(k)s. Nevertheless, employers understandably saw the warning as a yellow light, if not a flashing red light.
As of 2024, only about 4% of plan sponsors offered alternative investments, Applebaum reported. The threat of litigation also stayed their hand; 66 lawsuits were filed against plan sponsors that year, according to Encore Financial, a personal finance firm. High fees and other fiduciary failures were at the heart of most of the cases.
This isn’t the first time that Trump has tried to wedge private equity investments into 401(k)s. In 2020, during his first term, then-Labor Secretary Eugene Scalia issued an opinion that the mere presence of private equity investments among 401(k) choice was not in itself a fiduciary violation.
Scalia said his goal was to “remove barriers to the greatest engine of economic prosperity the world has ever known: the innovation, initiative, and drive of the American people.”
Until then, individuals were effectively barred from the investments by a Securities and Exchange Commission rule allowing only “accredited” investors — those who could show annual income of more than $200,000 or net worth of $1 million or more, not including their homes.
I didn’t offer an opinion then about the wisdom of these investments, but wrote only that “if I were inclined to invest my 401(k) money in private equity, I would hope that my family would arrange to have my head examined.”
My reasoning then was that private equity funds produce limited disclosure, or no useful disclosure at all; there are no commonly accepted formulas to measure their returns; and they’re subject to management fees immensely higher than conventional stock, bond or money market funds.
No less an experienced investor than Warren Buffett warned his own shareholders away from the sector, I pointed out.
“We have seen a number of proposals from private equity funds where the returns are really not calculated in a manner that I would regard as honest,” Buffett said at the May 2019 annual meeting of Berkshire Hathaway, which held his corporate investment portfolio.
Since then — indeed, since the Great Recession of 2007-2009 — the private equity sector has been promoting itself as a source of financial returns superior than those of conventional stock portfolios while glossing over cavils such as Buffett’s.
The promoters boast that their funds have low correlations with public markets — that is, when the public markets falter, the private markets gain; that they’re skilled at finding bargains among targeted businesses; and that they impose profit-gaining efficiencies on their acquired businesses.
In recent years, however, the private equity argument has faded. “Current data raises questions concerning these predicate assumptions,” wrote Nori Gerardo Lietz of Harvard Business School in 2024. Private equity fund performance, she observed, has “eroded materially.”
That’s true. From 2022 through the first three quarters of 2025, according to the research firm MSCI, private equity firms turned in annualized returns of 5.8%, while the Standard & Poor’s 500 index of public firms yielded 11.6%. Institutional investors such as public employee pension funds have begun to ask whether the sector deserves their money.
In the last year, the Yale University endowment and the public employee pension fund of New York City have sold off billions of dollars in private equity investments, some at a discount to their stated values. (To be fair, the California Public Employees’ Retirement System, or CalPERS, has remained a fan, attributing its recent improvement in overall returns to a strengthened investment in private equity.)
The doubts being voiced by these major investors has turbocharged the push by the private equity sector to reach into individual retirement accounts. By some measures, however, individual investors have even less tolerance for some of the features of private equity than do institutions. Unlike publicly traded stocks, these investments are illiquid, meaning they can’t be sold at will and they can’t be reliably priced.
As for crypto, the other major alternative investment being touted by Trump, its shortcomings are well documented.
In contrast to conventional stocks and bonds, they don’t represent stakes in anything concrete and as a result are extremely volatile.
Bitcoin, for instance, ran as high as $126,000 in October; as of Thursday it was priced below $72,000. Among other queasy-induced crashes, bitcoin lost 35% of its value in less than four weeks between mid-January and early February, falling from $96,929 on Jan. 13 to $62,702 on Feb. 4.
These are all factors demanding notice from small investors contemplating adding these sectors to their retirement funds. For that reason, some retirement professionals doubt that even the Trump administration’s favor will persuade many plan sponsors to open their doors to alternative investments. Trump’s regulators may be taking a hands-off approach to these sectors, but plaintiff lawyers aren’t likely to back off.
For individual investors, these are sectors that were made for the phrase “caveat emptor.” If you don’t know your Latin, it means “buyer beware.”
A Delaware Court of Chancery judge delivered a blow to wrestling impresario Vince McMahon and other World Wrestling Entertainment officials earlier this week.
Judge J. Travis Laster, vice chancellor of the Delaware Court of Chancery, issued sanctions for “spoliation of evidence” in the shareholder lawsuit over the 2023 merger between Ultimate Fighting Championship and WWE.
Laster ruled on Tuesday that WWE executives destroyed evidence by using the auto-delete setting on the messaging app Signal, enabling potentially relevant communications to be deleted.
The ruling means the court will operate under the assumption that five potentially damaging statements are true while allowing the defendants to rebut them.
The statements, according to the ruling, include that McMahon’s decision on the merger was “influenced” by Endeavor Executive Chairman Ari Emanuel’s “promise” to provide him with a continued role at the company and to indemnify him and provide legal support as federal investigators were looking into claims of alleged sexual misconduct.
McMahon pursued a deal with Endeavor in 2022 before WWE initiated its strategic review process, and both McMahon and then-WWE President Nick Khan worked with The Raine Group, a strategic financial advisor, “to steer the process to Endeavor and away from other potential bidders,” the ruling states.
In September 2023, entertainment giant Endeavor, the parent company of UFC, acquired WWE and merged the two sports entities to form a new, publicly traded company, TKO Group Holdings, in a deal worth $21.4 billion.
A month later, a group of shareholders filed suit against McMahon and other company officials in Delaware Chancery Court, claiming McMahon orchestrated a “sham sale process.”
Representatives for McMahon, WWE and TKO were not immediately available for comment.
According to the suit, McMahon, WWE’s controlling shareholder, turned down higher offers and excluded other bidders who would have ousted him and instead chose a deal that favored Endeavor’s Emanuel, a “close friend and longtime ally,” enabling McMahon to continue running WWE and shielding him from federal investigations related to a raft of sexual misconduct claims.
The complaint also alleges that the $21.4-billion deal undervalued the company and was “far below the offers” WWE’s board could have received from other interested parties had they “made any effort to negotiate in good faith.”
The litigation is related to the 2022 investigation by WWE’s board that found that McMahon made at least $14.6 million in payments between 2006 and 2022 for “alleged misconduct.” McMahon has denied claims of misconduct.
The settlements were made to women, including WWE employees, who alleged that McMahon initiated unwanted sexual contact and coerced women into performing sexual acts on him. In one case, first reported by the Wall Street Journal, a woman claimed that McMahon sent her unsolicited nude photos of himself.
McMahon’s alleged misconduct became the subject of ongoing investigations by the Securities and Exchange Commission and the U.S. Department of Justice.
“I am confident that the government’s investigation will be resolved without any findings of wrongdoing,” McMahon said in a statement to The Times in 2023.
Last January, the SEC announced it had settled charges against McMahon alleging he had violated federal securities laws by failing to disclose a pair of settlement agreements to WWE worth $10.5 million.
McMahon agreed to pay more than $1.7 million in a civil penalty and in reimbursement to WWE, without admitting or denying the agency’s findings. Federal prosecutors also have dropped their criminal investigation.
In January 2024, McMahon resigned as executive chairman of the board of TKO Group, one day after a former WWE employee, Janel Grant, sued the company, McMahon and former head of talent relations John Laurinaitis, alleging sexual assault, trafficking and emotional abuse.
Grant claimed that McMahon agreed to pay her $3 million in exchange for her silence.
The shareholder trial is set to begin on June 8. McMahon, Emanuel, Khan, TKO President Mark Shapiro, and WWE Chief Content Officer Paul “Triple H” Levesque are expected to testify.
In a high-stakes decision that will shape California’s economy for years, air officials late Friday approved a sweeping overhaul of the state’s signature climate program, cap-and-invest.
The 10-3 vote from the California Air Resources Board determines how aggressively the Golden State will curb planet-warming greenhouse gas emissions in the years ahead — and how billions of dollars in revenue will flow through communities, businesses and public programs statewide.
Cap-and-invest was nation-leading when it launched in 2013. The program forces major polluters to pay for their share of emissions by buying allowances at auctions or being granted them for free. It uses the revenue to fund public transit projects, wildfire prevention, affordable housing, clean energy, electric vehicles and safe drinking water.
The pollution limit — or cap — declines each year, reducing the total amount of emissions in the state and helping California reach its ambitious climate targets, including 100% carbon neutrality by 2045.
The Legislature voted last year to extend cap-and-invest through 2045. Officials at the Air Resources Board then spent the last several months drafting and revising the plan voted on this week, which received considerable feedback from oil and gas companies, environmental groups, lobbyists and lawmakers all jockeying for different priorities.
Some 200 people testified in person during the marathon two-day meeting preceding the vote, and the final proposal received more than 1,000 written comments.
Industry groups warned that capping emissions too much and too quickly would push refineries out of the state and drive up already soaring energy costs. But environmentalists and other stakeholders said giving too many concessions to fossil fuel interests would defeat the program’s purpose, which is to drive down emissions along a pathway consistent with what scientists say could preserve a recognizable climate.
The program was always planned to become stricter as the years unfolded, to give businesses more time to make the stronger reductions in their emissions.
Officials were under legal, market and budgetary pressure to pass a plan without delay, and also said it’s important for California to signal market certainty.
“It is no secret that climate policy is at a crossroads — under attack by an openly hostile and well-funded opposition and upended by global economic upheaval,” CARB chair Lauren Sanchez said during the meeting. “At a moment of uncertainty at the federal and international levels, California has the opportunity to lead with consistency.”
Among the key updates to the program are the removal of 118 million pollution permits, or allowances, from the market by 2030, and 900 million after 2030. Officials say this will amount to a steep, 11% annual lowering of the cap by the end of this decade, and 7% from 2031 to 2045, in keeping with the state’s mandated targets.
Critically, however, the update will also create a new pool of 118 million allowances above the cap that polluters can apply for and receive if they invest in decarbonization projects, a program dubbed the Manufacturing Decarbonization Incentive.
The incentive program is intended to discourage regulated industries from leaving the state. Two major refineries have announced exit plans in recent years, including Valero’s Benecia refinery and Phillips 66’s Los Angeles refinery, which shut down in 2025.
But many critics — including transit, affordable housing, environmental justice and clean water groups — said this amounts to a dismantling of the program.
“CARB has proposed creating exactly 118.3 million additional allowances … outside the cap, the precise number of allowances that must be removed from the cap to keep us on track for our 2030 targets,” said Caroline Jones, a senior analyst with the nonprofit Environmental Defense Fund. “This undermines the cap’s role in actually limiting climate pollution, which is the core function of this program.”
The board approved the decarbonization incentive but committed to additional workshops and evaluations of the program before issuing any allowances for it.
Other updates include more free allowances for industrial facilities and refineries, which regulators said will help reduce pressure on gasoline prices. Critics described the free permits as subsidies for oil and gas.
The update will also shift some allowances from gas to electric utilities, and increase funding for the California Climate Credit, a rebate that appears automatically on people’s utility bills.
But perhaps most controversial is how the update will affect the program’s multibillion-dollar revenue, which flows into the state’s Greenhouse Gas Reduction Fund each year and is distributed to various programs. Cap-and-invest has delivered $35 billion for climate projects in California since its inception.
The new incentive pool will mean the loss of $2 billion annually to the fund, or roughly half the amount it has received in recent years, according to an analysis from the Legislative Analyst’s Office.
While the Air Resources Board does not determine how the fund is divvied up — that’s the Legislature — opponents warned that this could amount to significant cuts for the Affordable Housing and Sustainable Communities Program, the Low Carbon Transit Operations Program, the SAFER drinking water program and the Community Air Protection Program, among many others that rely on revenue from cap-and-invest.
“This could create serious consequences, including a potential zeroing out of the state’s support for critical emission reduction programs,” said Phillip Fine, executive officer at the Bay Area Air District. “Striking the right balance is critical, but all consequences must be fully considered.”
It was a sentiment echoed by many who delivered comments during the board meeting.
“These additional allowances would not only endanger our emissions targets, they would also flood the auction market and depress cap-and-invest revenues,” said Pam Odell of the group Climate Action California. “These revenues fund vital programs, promote climate resilience, clean transit and transportation, and public health, especially in the most heavily exposed front-line communities.”
Some groups came out in support of the update, however, including Southern California Edison and Pacific Gas & Electric. The plan strikes a “balance between program stringency and affordability,” Fariya Ali, air and climate policy manager with PG&E, said during the meeting.
Assemblymember Jacqui Irwin (D-Thousand Oaks), who authored the bill that reauthorized the program last year, was cautiously supportive, noting that she would like to see more guardrails around the incentive program to ensure it aligns with state climate targets. But delaying the update would only create more uncertainty at a time when the Trump administration is already canceling clean energy funds and revoking California’s authority to set clean vehicle standards, she said.
“If we fail now to adopt the proposed amendments to cap-and-invest, it would be without a doubt the greatest victory that the Trump administration could possibly hope for to achieve against California’s climate policies this year,” Irwin said.
Oil and gas groups were tepid. Jodie Muller, chief executive of the Western States Petroleum Assn., said the update provides some near-term relief for refineries, but leaves too much uncertainty after 2030 to drive continued investment.
Brian McDonald, regulatory affairs manager with Marathon Petroleum Corp., said similarly that the oil company is “deeply concerned that the current proposal does not go far enough to provide the regulatory certainty needed to sustain in-state fuel production.”
In a briefing ahead of the vote, California climate economist Danny Cullenward said the update threatens both the “cap” aspect of the program by introducing the new allowance pool, and the “invest” aspect by threatening to reduce the program’s revenues.
The proposal is “being presented as a compromise when in fact it is sacrificing both of the key goals of the program,” he said.
The new plan is slated to go into effect Sept. 1.
Layoffs have continued with another tech company saying it was cutting people to enable it to use more artificial intelligence.
Groupon announced in a security filing this month that it will cut up to 400 jobs, or nearly 25% of its worldwide workforce, as part of a broader restructuring plan to make the platform AI-native. The Chicago company plans to carry out the layoffs in the coming months.
Earlier the company’s Chief Executive Officer Dušan Šenkypl had said the company “fell short of our expectations” last quarter.
Since 2022, more than 800,000 tech workers have been laid off, according to Layoffs.fyi, a website that tracks job cuts.
The surge in pink slips started in 2023, when companies that had gone on hiring sprees during the COVID-19 pandemic began to cut back. From January to April this year, U.S. tech employers announced 85,411 job cuts, up 33% from the same period last year, according to global outplacement and executive coaching firm Challenger, Gray & Christmas.
Groupon said in the filing that the decision to shift toward an AI-based company is to “better deliver on our mission, serving both customers and merchants.”
The company said the layoffs will cost it as much as $13 million, but save it more than $20 million per year.
This announcement comes as many e-commerce companies are shifting their business models to AI to reduce costs by automating many roles.
Artificial intelligence has also triggered fierce competition for top talent and is also fueling tens of thousands of layoffs this year. The result is that the class divide is widening in Silicon Valley as a tiny group of employees are landing unprecedented packages for AI skills, while many others struggle to find work.
The have-nots are doing everything that used to guarantee great jobs — refreshing resumes, optimizing LinkedIn profiles and doing interviews — but companies are much more picky these days. The tech jobless are rethinking their lives. Some are taking pay cuts, while others are leaving tech. Some are going back to study or launch startups. Some have retired.
Groupon shares, which have fallen 27% over the last 12 months, slipped 1% on Thursday to $21.20.
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