November 17, 2008
This letter is being written to express my strong opposition to proposed Rule 151-A. My career in the industry spans nearly 38 years and I hold the CLU and ChFC degrees as well as the CSA and LUTC graduate designations. I am a licensed counselor and am securities licensed with an IAR designation.
In my business, I write a sizable amount of indexed annuities and also variable annuities, based on customer suitability. This year, in particular, the guaranteed principal of an indexed annuity has been of significant benefit to my clients who wish to protect their savings from the risk of market losses.
Statements have been made of "widespread abuses" in this market. I would respectfully submit that there is just as much a chance of abuse in sales of registered products. Investors who might be conservative may have growth funds or small cap stocks in their portfolio, and that might well be just as unsuitable as abuses in the marketing of indexed annuities.
An insurance product that does not meet the test for being classified as a security should be regulated by state insurance departments and not under the jurisdiction of the SEC or FINRA.
In my opinion, the states are doing a good job of regulating the sale of indexed annuities as are companies who offer them. An insurance advisor who misrepresents these products should be subject to regulatory action including fines, loss of license and criminal prosecution, if necessary. The same standard should apply to registered representatives.
Indexed annuities are NOT securities as they are not subject to risk of loss from market activity, which clearly distinguishes them from securities. Another level of government regulation is not needed for these products.
The extension of the time period for comment on this regulation is appreciated.
Sincerely,
Michael W. Lassiter, CLU, ChFC