Under Section 4(g)(6)B) of the Securities Exchange Act of 1934 as amended, the Investor Advocate of the U.S. Securities and Exchange Commission (“SEC”) is required to prepare a summary of the most serious problems encountered by investors with financial products.  Accordingly, in its Report on Activities, Fiscal Year 2020 to the U.S. Congress, the SEC’s Investor Advocate reviewed the risks associated with leveraged and inverse exchange traded funds while discussing the Commission’s recent approval of the final version of the SEC’s Derivatives Rule which removed provisions that would have required investment advisers to exercise due diligence before approving retail investor accounts to invest in leveraged and inverse exchange traded funds (“ETFs”).

Continue Reading