Subject: N/A
From: Bruce DeLaurentis

Mar. 17, 2020

Comment on SEC Proposed Rule #S7-24-15: 

I began my financial career in 1977 as a registered rep and have been registered as an RIA for most years since. I’m presently the portfolio manager of an open-end mutual fund. I started trading equities in 1968. 
I’m very much opposed to this proposed legislation. Leverage is incorporated into financial products for a very good reason. When prudently and appropriately implemented, it dramatically expands the way a financial professional can customize a client portfolio to better suit the client’s needs. There are very few instances where leverage has been misused by competent professionals, and to burden the financial community with such onerous legislation would seriously impair the ability to implement leveraged products when appropriate. The supposed additional protection that this legislation is designed to achieve is a grossly disproportionate addition to the forever growing regulatory burden imposed on financial professionals. It’s fast reaching a point when more time must be devoted to regulatory compliance than servicing a client’s needs! 
In my practice, leveraged products play a significant role in enabling product design that offers a wide range of risk/reward profiles for use with clients. Leveraged products do much more than just offer the prospect of higher returns. They are a powerful money management tool because one can get the same return as an unleveraged vehicle by using just a portion of client assets, thereby freeing up the balance to invest in a conservative alternative. The result is that a client’s risk is reduced while getting a potentially higher return. 
Leverage enables inverse products that offer a way to protect against adverse market conditions. My 50+ years of investing experience has taught me that there are times when an investor should consider protection against the ravages of recurring bear markets. Inverse return products offer a practical way to add some protection during such times, and for the appropriate client, a way to potentially benefit by capturing positive return in a declining market. 
As a trained professional and financial fiduciary, I am already obligated to follow existing regulations that dictate that I be knowledgeable about the products I offer my clients and their suitability based on client needs and profile. I don’t see the necessity for an additional complex and burdensome regulatory overlay that targets a particular product category. The same could be said for any number of financial instruments. There should be sane constraint on the tendency for regulations to get more and more granularly complex to the point of being onerous and counterproductive.