August 27, 2008
I wish to object to the SEC's claim that fixed equity indexed annuities should be regulated as securities. The SEC claims that it is for consumer protection that they must be regulated. Enhancing suitability requirements and control by the insurance companies and state DOI's will do much more to protect consumers than adding the increased expenses of SEC supervision. Does the SEC really believe that placing a 130 page prospectus in front of a senior really protects that senior? In no way does that provide increased protection, just added expense and confusion.
Also claimed is that consumers buy fixed equity indexed annuities for the same reasons they buy securities. That is incorrect. Consumers buy fixed equity indexed annuities for safety of principal and to shelter them from market risk. With guarantees provided by the insurance company, the consumer has no risk of principal, unlike securities where the entire amount is at risk. This is a follow-the- money power grab by the SEC to keep funds currently going into fixed equity indexed annuities under the control of brokerage firms. It has precious little to do with consumer protection, and I strongly object to its implementation.