Subject: N/A
From: Darren Morgan

Mar. 18, 2020

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

Dear SEC, 

I am NOT in favor of SEC Proposed Rule #S7-24-15, the rule limiting purchases of leveraged or inverse funds. 

If this rule is passed, you would have to then go after futures and options markets. Are they not leveraged and, some, inverse? 

I am a financial advisor and licensed investment advisor, and while I do not sell or offer these funds to my clients, mainly due to a rule by my broker/dealer, I use them myself in my personal portfolios. I do this to give a boost to returns in good markets, and have used inverse funds to make money in bad markets. All they are is a financial tool. Like any financial tool, they can and are used incorrectly at times. Just as futures and options contracts can do the same. 

These types of funds give the average investor limited leverage of 1 1/2, 2 or 3 times markets, whereas options and futures may be 10x leverage or more. Yet, those may continue to be allowed? That makes no sense. 

Plus, limiting inverse funds assumes markets ONLY go up. This, too, is a fallacy, and a convenient one at that, to restrict inverse funds now that markets have risen for 11 years. If you assume long-only funds are the only ones that investors should purchase, then you should also guarantee they lose no money in down markets. This, of course, will not be done, nor should it. But neither should regulators limit the use of inverse funds. They are a valid product in the marketplace. Just as other financial products have their place, so do these types of funds. 

There is no good reason that I can see to limit the free market from making available leveraged and inverse funds. I am against any such rule. 

Thank you for your attention.