Subject: File No. S7-14-08
From: Jeffery V Rowe, JD
Affiliation: Strategic Marketing Consultant - Compliance

September 9, 2008

Having worked as both an insurance producer marketing primarily fixed indexed annuities and as a registered representative for a major brokerage firm, I come to this discussion with a unique perspective. I have been on both sides of the aisle, and I have been able to view the issue from every angle. Having thoroughly analyzed and evaluated the current issue, I can come to only one conclusion. The SEC seeks to place fixed indexed annuities under their purview to increase their authority to regulate and ability to control the flow of money and assets in the financaial services field.

Fixed indexed annuities are not securities. Their design and interest crediting methods do not differ from a traditional fixed annuity. With both FIA's and traditional fixed annuities, the insurance company uses the policy premium to invest in securities. In some cases this is exclusively a bond portfolio, in other cases it may include other securities such as options. In both cases, however, the insurer assumes the risk of loss. Interest is credited according to the performance of the underlying securities. With a bond portfolio, the rate is declared and fixed. With a mixed portfolio, the annuity owner has the opportunity to earn additional interest. The bottom line is that both are fixed and transfer the investment risk wholly to the insurance company.

FIA's fill an income planning need not met by any other financial product available. They offer the ability to safely accumulate interest and evenly distribute it throughout one's retirement.

Current regulation by state insurance commissioners is far superior to that provided by FINRA. State regulation is more nimble and responsive to the needs of its citizens. They are closer to any potential problems and are constatnly increasing regulation in problem areas.

FINRA has demonstatrated their inability to regulate registered representatives as evidence by a constant stream of serious and devastating conduct and suitability issues regarding registered representatives. The most recent include auction rate securities, variable annuities, and failures to disclose revenue sharing agreements.

151a in its current form is poorly written and opens itself to numerous legal challenges due to its vague and overbroad language. Further, it evinces a lack of understanding of the subject matter.

For the reasons stated above, as well as numerous others, it is clear that the motivation for 151a is purely political and driven by FINRA's self interests. It should not be passed, and fixed indexed annuities should be clearly defined as insurance products subject only to state regulation.