November 3, 2008
I am submitting my opinion regarding the proposed rule change to make Fixed Indexed Annuities securities under the SEC's 151A proposal.
I strongly oppose 151A. Fixed Indexed Annuities have no market risk to principal and offer a minimum guaranteed interest rate. With fixed indexed annuities (as with all tax-deferred fixed annuities) clients are guaranteed to wake up with more money than they went to sleep with. How can that possibly be considered a security?
Shortly after the events of 9/11, the markets took a pretty strong decline over the next several years. During that time, we actually had people calling our office overjoyed to know (a) that not only have they not lost money but (b) any previous interest crediting they had received in years prior was still in tact. Again, I ask the question - how can this be a security.
I strongly oppose 151a. In my opinion, this is not your turf. Any regulation should be left to the states and the national association of insurance commissions.