Subject: Support of File Number S7-14-08 and need for securities licensing

August 28, 2008

I am a licensed insurance professional. I am writing to you because I totally support the adoption of proposed Rule 151A, which would classify most indexed annuities as securities. I believe there is way too much abuse in the area of Index Annuities, and that many of the licensed insurance agents selling them don’t have a clue as to how these products relate to the stock market (or whatever index they are linked to) in terms of the loss of dividends, and the reinvestment of those dividends over an extended time frame. Because they don’t understand the implications, they are also not explained fully to clients (policyholders), so there are misrepresentations to consumers.

I am, however, concerned that the application of proposed Rule 151A would not be limited to indexed annuities and that other annuity and insurance products that happen to fit the criteria set out in the rule would be brought within the scope of the rule. I urge you to review the proposal to make sure you don’t just dump everything into the proposed ruling, but however target these index annuity and index insurance products, as well as require proper securities licensing for representatives who are selling these products. In my opinion, in order to fully explain how this product works, you have to discuss the stock market and related products like mutual funds and variable subaccounts, as well as stock options, since options are used to provide the stock market component for these products. Even though the products have guarantees that protect from the downside risk, consumers still need to be aware how these products relate to the stock market, and therefore, I believe proper securities licensing is appropriate.

Let me also clearly state that I firmly believe that people who promote unsuitable sales and engage in misleading sales practices should be aggressively prosecuted and subject to meaningful sanctions. However, concerns about suitability, disclosure and marketing methods, however valid, are not the relevant criteria for determining whether a financial product is or is not a security. While properly structured indexed annuities may not not share the same investment risk as investment products such as mutual funds and individual stocks, since with an indexed annuity the risk of a downturn in the related index rests with the issuer of the product and not the consumer. However, once again, in order to explain how these products work, the representative or agent selling the product will have to discuss the equity markets, which in my opinion should require a securities license.

In my opinion indexed annuities should continue to be treated as insurance products, and the state insurance regulatory structure is the appropriate means for addressing the concerns raised by the SEC. The professional organization I belong to, the National Association of Insurance and Financial Advisors, is committed to working with the NAIC and state insurance commissioners towards the goal of having every state adopt and vigorously enforce the NAIC’s model regulations on annuity suitability and disclosure. I also support NAIFA’s recommendation that a state regulatory body be designated to develop standards for indexed annuity product design so that inappropriate indexed annuity products would be prevented from reaching the marketplace (i.e. those with 10 or more years of surrender charges I believe are totally inappropriate for consumers, and are just a way for the agent to generate high commissions, which gives them incentive to sell the products that are in their and the insurance companies best interest, not the clients).

For these reasons, I urge the SEC to take a hard stand onthe proposed rule. Thank you for your consideration of my views on this matter.