| 07 August 2009

The pressure mounts for those still pushing the controversial category of leveraged ETFs. Morgan Stanley Smith Barney, which is majority owned by Morgan Stanley (MS), announced today that it will stop selling leveraged and inverse ETFs to its clients.

Investors will still be able to purchase the securities in "unsolicited" fashion, but those purchases will be subject to "enhanced oversight and review."

Financial Advisors with the firm have been asked to review all of their accounts and discuss these securities with their clients.

Morgan Stanley straddles the line between those who have stopped selling the securities all together, such as UBS Wealth Management (UBS), Ameriprise (AMP) and Edward Jones, and those who have decided to warn accounts but still permit purchases, such as Charles Schwab (SCHW) and Fidelity.

FINRA warned companies in July that leveraged and inverse ETFs should be sold only to "sophisticated" clients familiar with the short-term volatility and risk.