Subject: File No. S7-14-08
From: STEPHEN A MORRIS
Affiliation: CFP

September 11, 2008

I oppose this proposed new regulation which would define an indexed annuity as a security and then subject it to both SEC and FINRA regulation.

My reason for opposing this is due to the fact that I have used these kinds of products in my financial planning practice for almost 15 years as an alternative to higher risk mutual fund and variable annuity investments for some of my elderly and retired clients who don't want the added risk. So I think I do understand a little about their inner workings. With a fixed indexed annuity my clients have the ability to participate in some of the positive moves in the stock market while having no exposure to loss of principal inherent in a true equity type of investment. The better fixed indexed annuities have actually outperformed the stock market over the last seven years for one simple reason: none of them have lost any principal while the stock market has unraveled. Of course the same can probably be said about CD's, another type of fixed interest product.

So to me it's really quite simple. The product does not fit the definition of a security since it has both a limited upside potential along with complete protection of principal. If the product has been improperly marketed then go after those who are the real culprits, not the product. If you take this action you will be essentially throwing the baby out with the bathwater.