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Death Knell For Leveraged ETFs - FINRA Warning and Trading Bans

I warned investors about the insuitability of Leveraged ETFs in a previous article. Now, industry regulator FINRA and several brokerages are taking action against these bad actors.  In June, FINRA and the Massachusetts Attorney General warned that Leveraged ETFs were unsuitable for an investor to hold for more than a day.

In the last few weeks, Ameriprise Financial, Edward Jones, LPL Financial and UBS have placed bans or severe restrictions on the trading of these products. Liquidity will fall as as more firms ban trading these products, causing larger bid ask spreads.