Your rake analogy is a little flawed, just because those "known to the state of California...." warning signs are practically everywhere. If they were actually rare, and this rake was the only thing in the store that had the sign, and the store was requiring a liability waiver to buy one, then you'd have a much closer analogy. In that scenario, given the multiple warning signs (including an actual, literal warning sign), I do think it's fair to say the purchaser holds some blame for being a dumbass. The legal system might say otherwise, but, if you do something that you've been warned multiple times is really, really dumb, by who should know you're about to do a dumb thing, then personal responsibility needs to accrue somewhere.
It's a matter of opinion on how much this warning stands out. I don't think there is going to be a special waiver to buy Hertz stock; the whole point is to be able to go directly to the public in an unrestricted manner.
But let's stipulate that in some sense the warning is rare and extreme, that doesn't affect my opinion. If a new Apple laptop came with a warning that violation of a license would result in earth falling into the sun, the severity and rarity wouldn't make you say "gee it really might happen". You might look into whether it was really from Apple, if it was a joke, what other people thought. If millions of other people were buying them, you would assume that it can't happen, because the validation of things people do overrides the warning regardless of severity.
Deceiving someone by telling them the truth in a situation where they are conditioned not to believe it is not a trick that somehow transfers responsibility. It's not better than directly telling a lie. It's worse, because it sets people up to believe the next lie after you've proven they were wrong to ignore the truth. It's like, I don't know, cargo cult morality.
I wouldn't believe for a minute this is ok to buy because I'm untrusting. But if I trusted the SEC or the laws and concluded this can't be a scam, because it would be illegal otherwise, then it's a mark of corruption and rot in society to punish trust in the system as stupidity or lack of responsibility. The very fact that it is being allowed creates genuine doubt in my mind about who to believe and what's going on, even though I would not make the decision to buy.
Let's say Wertz Car Rental IPOs tomorrow. Why would you go out of your way to buy something you know nothing about, instead of just ignoring it?
Answer: because you bought a broad market index and didn't expect the standards to retroactively drop and let it get stuffed with junk. This is how the economic crash of 2008 happened.
A broad market index fund is not realistically affected by Hertz at this point, because the market cap is minute and the index fund simply holds all (most) stocks in proportion. The index fund inherently doesn't buy more stock just because it's cheap, if it's cap weighted.
So, while I'm not sure exactly what you are saying, I've seen other comments where people are upset at their index funds being somehow disturbed and it seems like nonsense to me.
I guess this episode raises some questions about equal weighted index funds, but those are relatively rare.
Not to mention, I would think that even total market funds sell bankrupt companies. You have to have some standards.
But in any case, worrying about what Hertz does to your total market fund seems like worrying about what a bug on your windshield does to your gas mileage.
