Veteran Wall Street Journal reporter Jonathan Weil is, for me, the E.F. Hutton of yore: when he talks, I listen. And so should anyone who cares about the health of America’s increasingly fragile economy and financial system. Let me tell you about Weil’s bona fides—and why his reporting about private equity’s hocus-pocus accounting has an ominously familiar ring.
Weil, who went into journalism after graduating with a law degree, is one of the rare financial journalists who understands financial statements and doesn’t need an analyst to explain them. He has shown time and again that his nose for corporate wrongdoing exceeds that of many Wall Street experts who are considerably better compensated.
When Enron was flying high and McKinsey was singing the company’s praises for disruption and innovation, Weil was the first reporter to question its financials. At the time, he was transitioning from the Journal’s Texas edition to the New York newsroom when he published the first story raising concerns about Enron’s accounting. After weeks of failed interview requests, the company eventually gave him what he later described as a “dog and pony show” in an interview with his alma mater, SMU Dedman School of Law.
Enron didn’t sufficiently address Weil’s pointed questions, and he broke the story on what would become one of the most infamous financial scandals in U.S. history. The Journal’s editors didn’t fully appreciate his reporting, but the editors at Fortune did. In March 2001, Bethany McLean—who earlier worked at Goldman Sachs and also understood her way around a balance sheet—advanced Weil’s reporting.
Weil hammered the first nail in Enron’s coffin, while McLean deservedly got credit for sealing the company’s corporate casket.
Weil’s Private Equity Reporting
Weil, who returned to the Journal three years ago after stints as a Bloomberg columnist and at proxy advisory firm Glass Lewis, has recently been sounding the alarm about how the troubled private equity (PE) industry values the companies it owns. While accounting stories can be complicated and make most people’s eyes glaze over, this one matters—and should keep Americans up at night.
Private equity’s biggest investors are pension funds and university endowments that count on annual infusions of cash returns to meet obligations to retirees, students, and other stakeholders. Rather than generating the outsized returns promised in exchange for their high fees, PE funds have underperformed the S&P 500 over the last one-, three-, and five-year horizons.
Weil and other industry critics warn the industry’s troubles are deeper than its glossy reports suggest. Since 2022, PE firms have often overvalued portfolio companies, making exits harder and cash distributions scarce. Savvy institutional investors have started selling their fund stakes at a loss to cut risk.
Now, the Trump administration is moving to allow ordinary workers’ retirement accounts to invest in private equity—a step some see as a backdoor bailout for the industry. Investment consultant Joshua Hemmert explained in Barron’s why this policy could be deeply harmful to retirement savers.
Elise Stefanik’s Bazooka
Trump loyalist Rep. Elise Stefanik (R., N.Y.) is among those questioning PE valuations—albeit in service of another political battle. She recently urged the SEC to investigate Harvard’s financial disclosures to bondholders as part of the administration’s war on the Ivy League.
In her letter to SEC Chairman Paul Atkins, Stefanik alleged Harvard’s finances may be more precarious than acknowledged. Much of its $53 billion endowment is invested in private equity funds that “are often overvalued due to reliance on internal estimates and outdated transaction data,” she said.
Weil’s takeaway: Stefanik “might as well have fired a bazooka at the entire private-equity industry.”
“If the SEC investigates Harvard over the valuations, it should also investigate the private-equity firms that provide them, if not the whole private-equity sector,” Weil wrote in a July 1 column. “This could be helpful. With a full-court press under way in Washington to get private-market funds, like private equity, into Americans’ 401(k) retirement plans, it’s more urgent than ever that alternative investments reflect market realities, not wishful thinking.”
One favorite trick is exploiting an accounting loophole: buying stakes in other PE funds at big discounts on the secondary market, then immediately marking them up to official net asset values—a move critics call “volatility laundering.” Sometimes this creates paper gains of 1,000% or more in a single day.
Some PE firms make these markups obvious; others bury them. Instead of listing investment costs in main tables, they hide them in long footnotes. That forces anyone trying to verify gains to manually match footnote costs with table valuations—sometimes an impossible task.
Weil singled out Partners Group Private Equity (Master Fund), the largest SEC-registered PE fund with nearly $16 billion in net assets. Its latest report listed 1,089 individual investments in the main table—but 1,095 cost figures in the footnotes, spread across three single-spaced pages.
“In other words,” Weil wrote, “there is no way someone reading the annual report could determine which cost figure applied to which investment—and no way to gauge which investments might have fishy markups.”
“Investors would be fair in suspecting that something here doesn’t add up,” Weil said.
Eileen Appelbaum, co-director, Center for Economic and Policy Research (CEPR), who has written acclaimed critical books about private equity, in June published a paper warning that all is not well with private equity and offered this warning about opening retirement funds to private equity:
The push for private equity investments in 401(k) plans is not likely to be advantageous for workers saving for retirement. Individual investors will be buying into overpriced assets — and paying high fees to do it. They may get saddled with what the industry refers to as the ‘dogs.’ And the risky and illiquid PE assets in their retirement accounts are likely to underperform a traditional investment of 60 percent stocks and 40 percent bonds.
Mark Hulbert, whose Hulbert Ratings tracks audited investment newsletters, has also cautioned against PE as a retirement option.
The Steve Diggle Warning
If Weil, Appelbaum, and Hulbert aren’t enough to give pause, consider Steve Diggle. His Artradis fund was once Asia’s largest hedge fund, making a fortune on the 2008 financial crisis by betting on mispriced mortgage risk.
Diggle shut down his long-volatility fund in 2011 when he believed markets had become less risky. This May, he launched a new fund betting that volatility is back—again because of mispriced risk.
“In 2025, financial markets are riddled with several fault lines,” Diggle said. “But now the bubble and the dangerous leverage is centered on private equity and private credit.”
History Repeats Itself
There’s a saying: those who don’t learn from history are doomed to repeat it. Given Weil’s and Diggle’s track records, investors would be wise to tread carefully. If private equity’s internal valuations are indeed wishful thinking, the fallout won’t be contained to Wall Street—it could ultimately gut the pension funds, endowments, and retirement savings millions of Americans are counting on.