At a congressional hearing last week, Democratic Rep. Alexandria Ocasio-Cortez pointed to WeWork as an example of the dangers of opening up private markets to everyday investors.

Unlike public companies, private companies aren't required to disclose to ordinary investors audited financial statements or other information those investors might need to determine a fair value for the companies' stocks, she said.

After being valued at $47 billion in a private funding round in January, WeWork is now considering going public at a valuation of as little as $10 billion.

If an everyday person had invested in WeWork at a $47 billion valuation, that investor would be "getting fleeced" now, she said.

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Democratic Rep. Alexandria Ocasio-Cortez warned her colleagues last week about making it easier for ordinary investors to put their money into private companies and used WeWork as a case in point.

Private companies typically don't release to everyday investors the kind of information that public companies do, such as audited financial statements, disclosures about government investigations, and the like, Ocasio-Cortez noted on Wednesday at a hearing of the House Financial Committee's Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets.

That leaves them at a disadvantage when trying to determine a fair price for the companies they're investing in, she said.

Ocasio-Cortez pointed to WeWork as an example of how ordinary people could be hurt if they invested in private companies. The commercial real-estate giant was valued at $47 billion in its last private funding round but is now considering going public at a much lower valuation, she noted — now reportedly as low as $10 billion.

"They had raised on a previous valuation of $47 billion, and now they just decided overnight 'Just kidding, we're worth $20 billion,'" Ocasio-Cortez said during the hearing. "They've cut it by over half."

If you, as an everyday person, "invested in WeWork thinking that it had a valuation of $47 billion," she continued, "you're getting fleeced."

WeWork's governance and business model have been criticized

The hearing focused on how the private markets have grown at the expense of the public markets and whether it would be a good idea to allow everyday investors to more easily buy stocks in private companies.

Retail investors are generally barred under existing regulations from investing in private companies. Typically, the only entities that can invest in such companies — for now — are accredited investors, who tend to be wealthy, or qualified institutional buyers, which include mutual funds and the like.

Not coincidentally, many mutual funds have recently slashed their valuations of WeWork.

WeWork — and CEO Adam Neumann in particular — has gone through a battery of criticism in the run-up to the company's initial public offering.

While it has described itself as a tech company, its business model involves creating coworking spaces by buying up commercial buildings and filling them with tenants. It hasn't made a profit, losing $700 million in the first quarter of 2019 alone. Among other eyebrow-raising practices, WeWork paid Neumann $5.9 million to use the word "we" in its name, but he gave the money back after it was criticized.

Renee Jones, an associate dean at Boston College Law School who testified at the hearing, said that valuations were "highly speculative" but that deregulation had given startup founders too much power.

"When founders control the board, an important source of discipline over the startup's operations is neutralized," Jones said in prepared testimony, adding, "This new era of founder control has created an environment at unicorns that is ripe for management abuse."

Ocasio-Cortez isn't the only public figure to criticize WeWork. Andrew Yang, a 2020 Democratic presidential candidate, called WeWork's $47 billion valuation "utterly ridiculous" in a tweet on August 21.

Ocasio-Cortez did not immediately respond to Business Insider's request for comment.

This article has been updated to clarify the context of the hearing.