July 12, 2008
Intially, the EIA seemed to be a good and fair product. Had it been regulated as a security in the beginning, the products that were initially offered would have been the standard for other companies. When the SEC did not regulate the EIA, it was an open door for the sleezy to come in. They began offering very expensive EI annuities with excessively high commissions, inferior index caps, excessively long withdrawal penalties and other drawbacks.
The SEC definitely SHOULD regulate these annuities as securities. Anything tied to the securities markets in any way, particuarly options on indices, IS A SECURITY. From their inception, I believed they were a security and should be regulated. The companies offering them initially should have welcomed such regulation. The crooks would have stayed away and seniors could have had another choice for investing in a regulated, protected product.
I work closely with seniors (being one myself) so I am acquainted with what is being sold to them in dinners and luncheons etc. Last year, I was invited to attend a recruitment seminar for agents to sell EIA's. Had an insurance commissioner or a SEC investigator been present, he would have gone immediately and demanded regulation. The gist of the meeting, given in the intial comments, was to intimidate senior citizens in order to make very high commissions. I left within minutes of hearing the speaker's opening remarks. The sales tactics being used should put these sales people behind bars. They target the elderly with scare tactics and fraudulent claims. They MUST be stopped.