Subject: File No. S7-14-08
From: James A. Bayer
Affiliation: AACEP

September 10, 2008

I have been an insurance professional for 33 years and I am
voicing my opposition to the proposed Rule 151A, which would
classified a fixed indexed annuity as a security product.

Fixed indexed annuities have been offered through insurance
agents since their inception. The state departments of insurance and the insurance companies themselves have done
a great job in protecting the consumer with compliance rules
and sales practices that agents must abide to that already meet or exceed the federal requirements that this ruling is trying to implement.

Fixed indexed annuities for many conservative people have been extremely important because they offer safety of
principal, tax deferral, interest rates that have the potential to keep up with inflation, various liquidity options and a guaranteed lifetime income that they will
never outlive, to name a few. With 80 million baby boomers
retiring or about to shortly, they will be looking for safe alternatives for their money. If this ruling is adopted undoubtedly it will lead to higher costs which in turn leads to lower returns to the consumer. Fewer advisors would
offer these products so the consumer would lose in the end.

In a case decision "Malone -vs- Addison Insurance Marketing"
the judge ruled that fixed indexed annuities are not securities. I'm sure that the intention of the SEC is to protect the consumer but the fact is that the consumer would be hurt by this ruling because of additional administrative costa and expenses, which we all know, the consumer ends up paying for. In this case that cost would effect the potential return a consumer would have received.

Is the SEC focused on declaring that fixed indexed annuities
become a security because they are being influenced by security dealers through their trade association the Financial Industry Regulation Authority (FINRA) to gain control over FIA's sales which would increase their revenues? The SEC wants us to believe it is for the protection of the consumer. If this is true then why are complaints on FIA's so low, 1 in $109 million in sales compared to variable annuities, a security, accounts for 63%
of total annuity complaints according to the 2004-2006 statistics from the NAIC. As for as protecting the consumer
the department of insurance from the states where they are doing business have done a great job in protecting the consumer.

This ruling if adopted would have grave economic consequences on our economy as well. According to the Advantage Copendium and other industry experts there could be an $800 million negative impact to the insurance industry, marketing agencies and to the agents themselves.
According to the Small Business Regulatory Enforcement Fairness Act of 1996, any ruling that could impact the economy over $100 million or more is required to be reviewed
by Congress. It appears that the SEC may have overstepped their authority in this matter.

In closing I am asking you to please reject proposal Rule 151A for the benefit of millions of Americans who want safe
guarantee products to put their retirement dollars into. And
for the thousands upon thousands of small business insurance professionals who will be severely impaired financially if this ruling is adopted.