On the other hand, it'd be helpful if a passive fund screened stocks to exclude ones that didn't meet criteria for being investible. E.g. if a stock is obviousl

On the other hand, it'd be helpful if a passive fund screened stocks to exclude ones that didn't meet criteria for being investible. E.g. if a stock is obviously a scam, it would be rational to not invest in it. Passive funds tend to track indices, so the responsibility of deciding what stocks are investible seems to be done by the folks who maintain the index. This is what appears to be happening here: index maintainers are unimpressed with stock, stock is excluded from index, passive funds that track index won't invest in stock