MutualFundWire.com: MSSB Makes a Decision on Leveraged ETFs

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Friday, August 7, 2009

MSSB Makes a Decision on Leveraged ETFs

After a review, Morgan Stanley Smith Barney has decided to impose restrictions on the sale of leveraged and inverse ETFs.

Company executives said that as of August 7, solicited purchases of the products will not be allowed in traditional brokerage accounts, while unsolicited purchases will be allowed, subject to "enhanced oversight and review."

Also, MSSB is no longer allowing purchases of the products in advisory accounts managed by Morgan Stanley Smith Barney Financial Advisors.

MSSB is the latest broker-dealer to create a policy on leveraged ETFs.

Company Press Release
NEW YORK, August 7, 2009 – In response to concerns raised by regulators about these securities, Morgan Stanley Smith Barney announced today that it has placed certain restrictions on the sale of leveraged, inverse, and leveraged inverse exchange traded funds (ETFs). Specifically, as of August 7, 2009, solicited purchases of these products will not be permitted in traditional brokerage accounts. Unsolicited purchases in these accounts will be permitted only subject to enhanced oversight and review. In addition, no purchases of these securities will be permitted in advisory accounts managed by Morgan Stanley Smith Barney Financial Advisors. Financial Advisors have been encouraged to review existing positions in these securities with clients to emphasize their unique characteristics and risks.