As if anyone needed another reason to not use Carvana to buy a car, Jalopnik brings news of the shady ways that the online car retailer is handling layoffs, in an article titled “Carvana Lays Off Thousands of Workers, Buys Car Auction Company for $2.2 Billion on the Same Day”

Carvana, the used car dealer founded a decade ago whose meteoric growth was met with a fair number of problems, said Tuesday that it would lay off 2,500 employees, with executives going unpaid for the rest of 2022.

In a filing with the Securities and Exchange Commission, Carvana called the move a “right-sizing” initiative.

Separately on Tuesday, a Redditor posted what they said was an email sent to Carvana’s employees, which says that various industry stresses — supply chain problems, higher interest rates and inflation, and slower car sales because of “all-time high car prices” — meant that Carvana’s growth was slower than expected. The email, which we have not verified but seems legitimate, also says the layoffs add up to roughly 12 percent of Carvana’s employees, and offered the same information about severance for the affected employees contained in the SEC filing.

Layoffs were probably an inevitability given that Carvana reported its first-ever sales decline in April of this year—a year when used-car prices and demand are still at unprecedented highs. It’s worth noting that, simultaneous with the revelation of these mass layoffs and executive pay cuts, Carvana announced this morning it will pay $2.2 billion to acquire vehicle wholesaler Adesa U.S., which operates 56 auction locations across the country.

I tried using Carvana once when I was in the market for a used car. The whole process had the faint whiff of something being not quite right, so I walked away from Carvana and never considered it again.

Back when I worked for a big box home improvement retailer, I used to see certain shitty products come onto the sales floors and think, “Which buyer approved this sub-standard product and why?”

The answer in some cases is kickbacks. Company A asks a buyer to make sure all her/his stores carry crappy-but-lucrative Product B. In exchange, the buyer receives a kickback in money or products or sometimes just fancy dinners.

Of course, this is a private retailer and nobody is hurt but customers who get crappy Product B and the retailer who has unhappy customers because of it.

But imagine if you were a Wall Street investment firm and, instead of a few hundred-thousand crappy widgets at Home Depot, you’re talking billions of dollars in government employee pension funds?

Not only is there incentive to kickback money to pension fund managers for choosing a certain investment firm, but the investment firms themselves stand to make millions of dollars in fees that they never have to report in full. Nobody is certain how many pension funds are being robbed because the reporting rules are either opaque or non-existent.

Excellent news site The Lever has an interesting story titled “Wall Street’s Biggest Secret Could Be Exposed” which details how some Democratic (note: not Republican) NY legislators are trying to bring some transparency to a world of huge money and shady investment practices:

Wall Street’s most closely guarded and lucrative secrets may finally become public, if New York Democratic lawmakers pass a new bill requiring financial firms to show what they are doing with hundreds of billions of dollars of Americans’ retirement savings.

The groundbreaking legislation sponsored by New York Assemblyman Ron Kim would require state officials to disclose the contracts governing how private equity firms, real estate companies, and hedge funds manage money from New York’s pension system.

In the two decades since public pension systems began funneling workers’ money into those high-risk, high-fee investments, states and cities have concealed the contracts governing the investments of the retirement savings of millions of teachers, firefighters, first responders, and other government workers. If the New York legislature’s Democratic supermajority passes Kim’s bill, for the first time it would open up those contracts to public scrutiny.

“Portfolio managers charge our state exorbitant management fees while underperforming the market,” Kim said about his bill. “To add insult to injury, these investments are accelerating the climate crisis and destroying the American healthcare system. The pension holders have a right to see what their hard-earned money is being invested in, and legislators have a right to review whether these funds are pushing us further into climate catastrophe and destroying public goods.”

Now, I don’t live in New York so you might ask why do I care? Because New York’s financial footprint is so outsized when it comes to pension funds that any rules New York forces investment firms to adopt could affect rules in other states. New York’s could also be used as model legislation for other states.

(Note that the video below is not related to the NY legislation. I included the video merely as a primer on the problems facing the pension system.)