Subject: File No. S7-14-08
From: Richard V Spruill, CSA
Affiliation: Certified Senior Advisors

July 11, 2008

In all my 34 years in the Financial Services Industry nothing has amazed me more than the corrupt power given the NASD/SEC. Anytime the big boys can not compete with something they want to destroy it then take it over as their own. Just so they can get their fingers into the pie...Look at Viatical Settlements...They judge shopped until the third judge agreed to shut them down to so called (check them out) Thus fulfilling their quest as once shut down they couldn't pay their bills...The Receiver sold all of these supposedly non existent Viatical policies to his buddies and the sec started retroactively penalizing the agents that sold them. Stating that they are now considered securities instead of Death benefits of a life insurance policies on a terminally ill policyholder retroactively turning them into securitees by the SEC...Guess who is selling these so called bad investments now? The security industry of course Same thing happened to me and a group of investors with pay phone business's we owned...The SEC stepped in again because they couldn't compete, Shut them down and again a less than honest receiver has taken off with our money and our equipment...Now the SEC once again is up against a superior safe product and wants to regulate that which needs no regulation...Do you have any idea how many senior citizens lost their life savings because of good programs shut down by the SEC? The SEC (In my opinion only cares about its own pockets and nothing about the senior citizens)...Tell me how a product that has no risk to it what-so-ever should be considered a security other than to add it to the SEC/NASD/Broker Dealers bottom line...I had a securities license for probably 30 years...In that 30 year span I received a lot of complaints from clients who lost money in a mutual fund...I have received zero complaints on the indexed annuity...Two years out of five my own parents received 19% returns from their fixed indexed annuity...In the bad years they lost nothing. All the clients I had in indexed annuities not only did not loose money during the Enron debacle but spent the next seven yeas almost doubling their money while the Stocks, Bonds and Mutual Funds clients just got back to even and then BOOM The market took them back down again...By the way who was the overseers of that debacle...Now they want to over see a risk less Fixed Indexed Annuity? Why? Greed is why (In my opinion)They want to take it over and over regulate it so their NASD/Broker Dealers and Brokers can add fees to them for themselves...They claim that seniors are at risk of receiving in appropriate annuity but how appropriate is it to sell them high risk stock bond and mutual fund portfolios...They cost some half of their life savings...A bad year in the market has lost clients 50 to 80% of their retirement proceeds built up over a lifetime...A bad year in a Indexed annuity ? They broke even with the year before...You talk about high commissions...That one really makes my blood boil...As a securitees rep my clients routinely paid broker fees of 4 to 5 percent up front out of their own pockets and then annual maintenance fees of 1 to 2 percent a year... My clients in Indexed Annuities pay no commissions out of their pockets...100% of all fixed indexed commissions come from the insurance company's pockets thus allowing 100% of my clients money to grow immediately without having to make up broker fees and without having one to two percent sucked out of their account every year even when their accounts made no money....I think the SEC needs to address their absorbident commissions that come out of their clients pockets instead of ours....A typical well known mutual fund company charges 5% up front then 2% a year after that. How much is that just in ten years? Well lets see: 5+2+2+2+2+2+2+2+2+2 = 23% and you want to begrudge us a lousy one time 8 or 9% Give us a break here... NO, Let us keep giving our clients the breaks here...I could go on on on but I hope you get the picture...Please do not let the SEC Bully every decent program just because their fair haired boys many who were caught up in the Enron, Bear stearns and many other crooked and regulated deals that cost some of my clients hundreds of thousands of dollars that they will never get back...Leave the one really good safe decent return product where it belongs in the State Insurance departments hands...There is absolutely no reason to turn such a safe program into a security...I employ you to read the laws of risk and the resulting regulation of...You will see there is no risk with an Indexed product....Thus no reason to put the SEC in charge of it...Hell, Look at all the lying cheating and down right criminal acts that happened under their noses...It doesn't help the clients that lost their money by fining the crooks that did the deed...that's like closing the barn door after the horses got out.It does however put money in the SEC pocketbook...Why don't you just put the fox in charge of the hen house...Stay out of our well regulated industry where our complaints are minute compared to the securitees complaints. As to the surrender fees? Does a certificate of deposit have a surrender fee? Why aren't you trying to regulate the banks? Surrender fees are imposed for similar reasons. Insurance companies need time to recapture the expense of putting an annuity policy on the books and managing the accounts. If an insurance company gives a 5 to 10 percent bonus the surrender fees are also there to recoup the expense of the upfront bonus...But there are liberal withdrawal features. You can take out 10% per year without a penalty and receive 100% if the client enters a nursing home or dies...a bank CD will impose a full penalty regardless of the reason....In an Indexed Annuity a client can elect to take a retirement income for the rest of their lives with no penalty...There is just so much more liquidity here than anywhere else...What happens to the 5%upfront commission and annual fees in a mutual fund if a client needs his money especially if the market went down? Does the mutual fund give back 100% of his money that he invested? or...Doesn't he just get back the money left after expenses and losses or gains...You see a penalty is a penalty is a penalty but the mutual funds are permanent penalties that never go away while our surrender fees go away after 4 to 10 years and they still can get free outs each year.
In my opinion this is just the best returning safe program I have ever seen for retirees...Needs no regulation from the SEC
Thank you for listening
Richard Spruill