Proposed Sales Practice Rules for Leveraged / Inverse Investment Vehicles
Summary
SIFMA provided comments to the SEC on the proposed new Rule 15l-2 under the Securities Exchange Act of 1934 relating to required due diligence by broker-dealers regarding customers’ transactions in certain leveraged/inverse investment vehicles, as set forth in the Commission’s Release No. 34-87607.
SIFMA reiterates our strong opposition to the adoption of the Proposed Rule, which we view as a significant and unwarranted departure from the Commission’s long-standing precedent and Congressional mandate.
We hope that the Commission will continue its efforts to enhance investor protection in a manner that is consistent with the long-held values underlying the federal securities laws.
Excerpt
Ms. Vanessa Countryman
Secretary
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549-1090
File No. S7-24-15: Proposed Sales Practice Rules for Leveraged/Inverse Investment Vehicles
Dear Ms. Countryman,
The Securities Industry and Financial Markets Association (“SIFMA”)1 submits this letter to respond to the invitation of the U.S. Securities and Exchange Commission (“Commission”) for public comment on the proposed new Rule 15l-2 under the Securities Exchange Act of 1934 (the “Proposed Rule”)2 relating to required due diligence by broker-dealers regarding customers’ transactions in certain leveraged/inverse investment vehicles, as set forth in the Commission’s Release No. 34-87607 (the “Release”).3
I. Executive Summary
SIFMA and its members appreciate the opportunity to provide comments to the Commission on the Proposed Rule. SIFMA supports the Commission’s goals of investor protection and the maintenance of fair, orderly, and efficient markets.
SIFMA and its members would like to express their opposition to the adoption of the Proposed Rule. We believe that the Proposed Rule is contrary to public policy and may have a lasting negative effect on the industry and future Commission rulemakings. The scope of the Proposed Rule in solely addressing leveraged/inverse investment vehicles is a departure from longstanding Commission precedent and the foundational principles of our federal securities laws. SIFMA and its members are concerned that engaging in an evaluation of the merits of certain leveraged/inverse products could create a “slippery slope” that may one day encompass other publicly traded products and detrimentally restrict investors’ ability to participate in our public capital markets.