SEC Proposes Rule to Regulate Sales Practices Regarding Shares of Certain Leveraged/Inverse Investment Vehicles


On November 25, the U.S. Securities and Exchange Commission (SEC) issued a release (Proposing Release) proposing new Rule 211(h)-1 under the Investment Advisers Act of 1940, as amended (Advisers Act) (the sales practices rule), that would require an investment adviser that is registered (or required to be registered) with the SEC to exercise due diligence in approving a retail client’s account to buy or sell shares of certain “leveraged/inverse investment vehicles.”1 This is the first rule to be proposed pursuant to Section 211(h) of the Advisers Act.

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