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Nick Lafferty Comment On Regulatory Notice 22-08

Nick Lafferty

TD Ameritrade has a golden standard disclosure that the investor is required to read and sign before buying and selling Leveraged ETFs. Requiring all brokers to do the same, essentially, solves any problems that may be faced with educating a retail investor that a 2x/3x ETF can gain or lose 2x/3x times what it is measuring. Therefore, the investor knows it's not suitable to hold for any extended period of time, which is also documented in the disclosure that the investor is required to read and sign, if it went over his or her head the first time around. Trying to create an illusion that Leveraged ETFs are, for all intents and purposes, more complex than those two sentences, will probably be viewed as intellectual dishonesty by Congress. Taking further regulatory framework advancements will probably be viewed by Congress as undemocratizing markets, as they sided with the "apes" of the Gamestop fiasco, and will probably take action against the SEC to roll back such regulations, especially since there are more Senators and Representatives interested in these products due to there being conflicts of interest surrounding these members buying and selling individual stock. More Federal Reserve members are also for the same conflicts of interest. As a retail investor, I'm concerned with payment for order flow. We are called "dumb money", which are the last peoples' orders that should be taken into consideration, if that term is correct. It's a known fact, that the "dukes" see stop orders that are placed by traders just so they can be cleared out. Not to mention that when an order is placed, institutions who received the order flow look to "fade" the move as soon as they can. To me, that is not only unfair, it's bordering on carnival-style shenanigans, if not an outright scam, and should be illegal in any market that labels itself as fair. Given more scrutiny that the Federal Reserve has received because of runaway inflation, more scrutiny will probably be given to the SEC for musing to undemocratize markets, especially in light of what they should be doing but aren't currently taking steps to do - creating a fair, unmanipulated market. I'd hate to see a disgraced removal or resignation of the Chairman of the SEC, as he is qualified to do the job, he seems to be a decent person, and on a personal note, I follow him on Twitter. Let's put the correct foot forward.