Leveraged ETF Blowups Draw SEC Scrutiny Amid Market Turmoil (2)

The U.S. Securities and Exchange Commission is stepping up its scrutiny of leveraged exchange-traded products as violent market swings have prompted a spate of complaints.

The surge in volatility amid the coronavirus pandemic has sparked a reckoning of sorts for leveraged products, which use derivatives to boost returns of the securities they track. While those contracts can boost gains, they tend to amplify losses as well. A total of 16 leveraged offerings liquidated last quarter, according to data compiled by Bloomberg, while others have opted to reduce leverage.

“It’s pretty obvious that there’s sort of a widespread lack of understanding ...