Subject: File No. S7-14-08

October 14, 2008

Good morning.

I believe that the effort to define index-based annuities is a poor idea and a waste of time. If, as has been suggested, the SEC is trying to make index-based annuities securities simply because of the way they are being sold, the plan is an even worse idea. Perhaps the insurance industry "permitted" abuses to occur in the marketing practices of a few "rogue" agents, and perhaps it should have established certain guidelines as to who would be allowed to purchase an index-based annuity (which would probably be struck down in a legal challenge). For the SEC to demand the power to regulate what is clearly an insurance product is nothing more than a very bad idea.

I have almost thirty years' experience in the securities and financial service industries, and recently sent my first book on personal finance to the publisher. As I have watched the recent market meltdown I have been thrilled to tell my clients that not one penny of their index annuity money is at risk or has been lost. That would not be the case with variable annuities or variable life, which are clearly securities products.

I do wish the SEC would spend a little time regulating things that clearly are securities, like the derivatives that are destroying the world. I wish the SEC would set up some rules to prevent Wall Street firms from creating highly sophisticated products, dumping them on an unsuspecting world, collecting enormous fees, commissions, and profits, and then getting bailed out by the taxpayers when their foolishness and greed become apparent and threaten the entire planet. Wasn't Long-Term Capital Management a wake-up call for you folks?

Where was the SEC oversight when SunAmerica Securities was allowed to terminate me for cause because their Compliance Department had made a mistake? SunAmerica Securities had failed in their responsibility to supervise; I was merely doing what they had told me to do. My spotless record of over twenty years was thrown out the window with me so that a bad company could free themselves of their mistake and make it look like they had done something to fix it. SunAmerica's bad management and bad decisions cost me over half a million dollars and cost my clients almost $2 million, but the SEC was nowhere to be found despite numerous appeals by me. To add insult to injury, SunAmerica even stole the commissions they owed me and took away my pension plan. It was then that I learned that the SEC is only in business to promote itself and its "fat cat" buddies on Wall Street, and could care less about those it is hired to protect.

I was in a meeting when Eli Broad spoke to hundreds of SunAmerica Securities reps in Los Angeles. He told us repeatedly that SunAmerica Securities would not be sold, and that he had no intention of ever selling the company under any circumstances. He then went back to his office and finalized the documents to sell SunAmerica Securities. Where is the SEC when CEOs lie?

Where was the SEC when a SunAmerica Securities representative came to West Texas and promised people a minimum of 40% annual gains on their investments? He took away dozens of my clients, clients I had served well and faithfully for years, and who proceeded to lose great sums of money while the SEC did nothing. I suffered from this person's actions, as did many others. I never heard that this person was punished for his crimes. I know many others who have engaged in similar prohibited activities who are still thriving in the securities business. Their clients suffer, but these representatives accumulate huge wealth for themselves.

What I am trying to say is that the SEC has a dismal record of enforcement and oversight. The SEC has failed in its responsibility to protect the American people from the likes of Lehman Brothers and Goldman Sachs, companies that have turned America into a casino where the insiders are the "house". What makes you think you could properly regulate index-based annuities if you don't even understand that they are not securities?

I strongly recommend that the SEC get its act together and clean house so that you may do the things you are already charged with doing, and let the insurance industry regulate products that are obviously insurance products.

Charles W. Kraut, MBA
Lexington, Virginia