Strategy turns MSCI’s own SEC words against its $24 billion MSTR threat

Strategy has challenged MSCI's proposed “non-operating company” screen by tying it to a regulatory argument MSCI made four years ago in a letter shared on Aug. 31.

The Bitcoin treasury company says the new methodology requires MSCI to judge whether Bitcoin belongs inside an operating business. That puts MSCI's 2022 defense to the Securities and Exchange Commission (SEC) at the center of the dispute.

MSCI told the agency that index providers “express no opinion or view as to whether any market, company, strategy or investment is good or bad,” a position Strategy says becomes harder to reconcile with a test that classifies corporate assets as operating or non-operating.

MSCI's latest 10-K says adviser-style obligations could increase the costs and complexity of its operations, giving Strategy a financial consequence to attach to its regulatory argument.

The index provider opened the consultation on Aug. 3 as part of a plan to expand existing exclusions for investment funds and business development companies. The proposal would use a core screen and five financial ratios to identify additional “non-operating companies,” with four triggered flags making a company ineligible for Global Investable Market Indexes.

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