October 14, 2008
In light of the recent economic issues facing the world, it apprears as though more oversight should be directed to areas already under the SEC umbrella. Specifically, we see what little or no oversight on short selling and other complicated (and unregulated) activities like credit default swaps has done to some well established American businesses in the recent weeks. Individuals have lost upwards of 40% of their nest eggs, not to mention jobs, house, etc. that were lost as a result of the economic downturn. All of this was spurned not by activities associated with fixed investments such as equity indexed or fixed indexed annuities, but with investments and activities monitored by the SEC.
It seems to me that if there is a problem with how fixed indexed annuities are sold, it is the responsiblity of each state to put in place requirements (licensing, suitability standards, etc.) that would address the problem. The answer is not to use a federal agency (SEC) that is already incapable of handling its current responsibilities to take on a job that is better suited to be handled at the state level. More specifically, a state can better weigh what is right for its constituents based on demographics. Florida may (and does) chose more restrictions based on its demographics, restrictions that may unduly restrict commerce in an area with different demographics. Clearly, this is something for each state to regulate as oppposed to federal interference (and cost).
Lets have the SEC keeps it eye on the ball and not distract it with products that are clearly fixed in nature.