Any test of specialized knowledge should be dependent on the specific investments being considered. The degree of investor awareness required to invest in a leveraged S&P 500 2X fund is suitable for many investors who are aware basically of the risks and have been informed of the proportion of net worth they could / should invest.
Brokers should be held legally liable for INITIATING any recommendations and/or not advising against deemed excessive for that specific investor. (but not just based on the investors holdings with their firm but their entire net worth and portfolios ... based on real life bad experience). "One size fits all" vetting is ridiculous of course but an entire set of bureaucratic hoops and documentation isn't any better. Do you really want to make it impossible for an average investor to have an IRA with 5% leveraged holdings? How do you propose to deal with on line individual trading?
The idea of a cooling off period is undefined. Done on a per investment, per class, per industry or all leveraged securities? Based on what. How different than closing the markets entirely. This devil is in the details.
I would like to be contacted about further specifics on these proposals.
Perhaps a far more important way to safeguard the smaller less investors is to stop the practice of offering IPO opportunities to clients with the biggest holdings first (low prices usually) then down the line to their smallest when the prices are the highest or least sellable.
James Eck Comment On Regulatory Notice 22-08
Any test of specialized knowledge should be dependent on the specific investments being considered. The degree of investor awareness required to invest in a leveraged S&P 500 2X fund is suitable for many investors who are aware basically of the risks and have been informed of the proportion of net worth they could / should invest.
Brokers should be held legally liable for INITIATING any recommendations and/or not advising against deemed excessive for that specific investor. (but not just based on the investors holdings with their firm but their entire net worth and portfolios ... based on real life bad experience). "One size fits all" vetting is ridiculous of course but an entire set of bureaucratic hoops and documentation isn't any better. Do you really want to make it impossible for an average investor to have an IRA with 5% leveraged holdings? How do you propose to deal with on line individual trading?
The idea of a cooling off period is undefined. Done on a per investment, per class, per industry or all leveraged securities? Based on what. How different than closing the markets entirely. This devil is in the details.
I would like to be contacted about further specifics on these proposals.
Perhaps a far more important way to safeguard the smaller less investors is to stop the practice of offering IPO opportunities to clients with the biggest holdings first (low prices usually) then down the line to their smallest when the prices are the highest or least sellable.