Massachusetts Initiates Sweep of Single-Stock ETFs

Posted on September 1st, 2022 at 3:24 PM
Massachusetts Initiates Sweep of Single-Stock ETFs

From the Desk of Jim Eccleston at Eccleston Law.

Massachusetts’ head securities regulator, William Galvin, has initiated a sweep of complex single-stock exchange-traded fund (ETF) offerings that were recently introduced to the public. 

Galvin has sent letters to Foreside Fund Services, IMST Distributors, ALPS Distributors and Quasar Distributors, which are Massachusetts-based broker-dealers that distribute the Direxion, AXS Investment, GraniteShares, and F/m Investments product lines, respectively. Galvin has requested that the broker-dealers respond to the letter by September 1.

According to Galvin, “For nearly all Main Street investors, there is no difference between investing your money in single-stock ETFs and gambling with that money at a casino.” Similar to leverage ETFs, single-stock ETFs require daily monitoring and do not track the underlying performance of a stock over time. While single-stock ETFs may be suitable for day traders, most retail investors would be best served by investing their funds in long-term holdings, according to Galvin.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, etf

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