The boxing gloves are officially off: The Select Sector SPDR Trust filed a lawsuit against Invesco PowerShares Capital Management and related entities for trademark infringement and misappropriation.
At the core of Select Sector SPDRs' complaint is PowerShares' use of ticker symbols for the nine sector ETFs it launched in April, which are based on the S&P Small Cap 600.
These new symbols differ by just one letter, an "S" appended to the end of the same symbols used since 1998 by Select Sector SPDRs for precisely the same sectors.
"This is a deliberate and unconscionable act on the part of PowerShares to confuse both institutional and retail investors," said Dan Dolan, director of Wealth Management Strategies for the Select Sector SPDR Trust in a statement. "At a time when transparency in finance and investing has never been more necessary or in demand by regulators, legislators, and the investing public, PowerShares has succeeded in casting an unfortunate shadow on Wall Street's efforts to eliminate financial opacity."
The Sector SPDRs are exchange-traded funds (ETFs) that split the S&P 500 into nine industry sector index funds.
The nine PowerShares’ ETFs named in the suit are listed for trading on the Nasdaq stock exchange whereas the Sector SPDRs are listed on NYSE Arca.
The similarities between the two competing investment firm’s ticker symbols are, for instance: Sector SPDR Consumer Discretionary (XLY) vs. PowerShares S&P SmallCap Consumer Discretionary Portfolio (XLYS).
A complete list of the competing funds and their ticker symbols is available online.
Dolan notes the symbols of 101 out of 102 ETFs previously launched by PowerShares start with "P." The sector funds in question are the only products in PowerShares ETF family that begin with an "X," followed by the same two letters as Select Sector SPDRs, with only an "S" appended at the end.
“Each of our ETFs are known by their particular 'XL'-based ETF symbols more than they are known by their full name, especially in the financial services and trading community,” said Dolan in a press release.
The Sector SPDRs have a combined $31.97 billion in assets under management as of the July 23rd market close.
The suit was filed under Section43 of the Federal Trademark Act and common law of the state of Texas.
Representatives from Invesco PowerShares declined to comment.