November 14, 2008

Subject: File No. S7-14-08

Dear Sir: I am writing in concern for the rule that would allow SEC oversight of indexed annuity sales. Although I work for a mutual fund company, I have been a financial advisor and insurance licensed advisor in the past for over 30 years. I have seen many instances of annuity sales to investors due to the higher commissions on annuities rather than what is suitable for a client. As an representative of a mutual fund company we also find it very difficult at times to compete with annuities as the commissions are higher, the products are guaranteed (by an insurance co) and the extra riders that add costs to the investor plus the insurance representatives that wholesale the products can do many things that mutual fund companies cannot do. How this creates severe problems is that most of the sales come from less sophisticated advisors because they are easier to explain besides the issue of more compensation. This is not a problem for the good advisors but the large segment of less sophisticated advisors primarily in the insurance and bank distribution channels. Not being regulated by the SEC is asking or future severe problems as annuities are a much needed product for the future retirees to achieve their objectives. Many good brokers will not sell them because of the excessive fees and expenses which leave the lesser qualified brokers to sell them. This problem is a potential ticking bomb that needs to be solved by consistent regulation by the SEC. Thank you very much for your consideration.

James M. McCullough (Jim)
Senior Vice President
Aquila Group of Funds