Subject: File Number S7-14-08, Proposed Rule 151A

October 14, 2008

I am a Registered Representative and Licensed Insurance professional. I want to express my concerns about the adoption of proposed Rule 151A, which would classify most indexed annuities as securities.

MOST IMPORTANTLY, I urge you and state representatives of the insurance industry to enforce existing rules and laws (and legislate new ones if required) to distinctly separate securities products from non-securities products.

Equity-Indexed Annuities are confusingly marketed as fixed products but with language that is definitely securities oriented. (“You can have your cake and eat it too!”) Please insist that all of the following types of verbal and written language be eliminated and forbidden with fixed products (including “Equity-Indexed Annuities, if you choose to leave them outside SEC jurisdiction):

Market; stock market; equity; equity-indexed; variable; S&P 500; and all other seccurities and market-related language

This clear separation and enforcement will solve most of the problems we’ve seen with Equity-Indexed Annuities (and other “Equity-Indexed” products). State regulators MUST insist that these types of products are marketed without confusing formulas, tricky language and conflicting signals for consumers, whether fixed or variable. I personally have worked with consumers who have purchased EIA’s without a clue as to their internal calculations, true risk and various Caps and Multiple Index Calculations. It appears the sales people who sold them were not fully aware of their inner workings as well.

I firmly believe that people who promote unsuitable sales and engage in misleading sales practices should be aggressively prosecuted and subject to meaningful sanctions. However, concerns about suitability, disclosure and marketing methods, however valid, are not the relevant criteria for determining whether a financial product is or is not a security.

I am concerned that the application of proposed Rule 151A would not be limited to indexed annuities and that other annuity and insurance products that happen to fit the criteria set out in the rule would be brought within the scope of the rule. I urge you to withdraw the proposal as currently worded.

The professional organization I belong to, the National Association of Insurance and Financial Advisors, is committed to working with the NAIC and state insurance commissioners towards the goal of having every state adopt and vigorously enforce the NAIC’s model regulations on annuity suitability and disclosure. I also support NAIFA’s recommendation that a state regulatory body be designated to develop standards for indexed annuity product design so that inappropriate indexed annuity products would be prevented from reaching the marketplace.

Thank you for your consideration of my views on this matter.

Frank Munn, Agent
New York Life Insurance Company