Just say “no.”
That’s what ProShares Chairman Michael Sapir is advising his clients and others say when it comes to the recent “unprecedented” proposal from the Securities & Exchange Commission that would make it more burdensome to buy, or even prevent the purchase of, leveraged and inverse funds.
Under the proposed regulations, buyers of these types of products would be required to present and provide extensive financial and personal information and then be evaluated to see if a person would be eligible to purchase leverage and inverse funds. This applies whether a single person or financial representative engages in the transaction.
Sapir says that the regulations are bad for investors as they would preclude some investors from purchasing these products as well as influence brokers as to whether or not they should sell them. He also says regulation here is unnecessary as there are many other funds and instruments equally complex that the SEC doesn’t require this process for.
“Requiring you to qualify to purchase a security in the public markets would be an unjustified break with how the SEC’s regulation of the sale of securities in the public markets has worked for nearly 90 years,” Sapir says. “The proposal would be at odds with our long-standing system that gives investors and their advisors the freedom to make their own investment decisions.”
The SEC proposal can be viewed here: https://www.sec.gov/rules/proposed/2019/34-87607.pdf