July 8, 2008
The proposed ruling on index annuities is out of jurisdiction for the SEC.
The SEC is a regulatory body to regulate investments. These are NOT investments, but rather fixed insurance contracts. The SEC has clearly been paid by the securities industry as 'payola' and has made a deal with FINRA in an effort to make this interpretation. Taking money from the securities industry to influence a decision is not only immoral, it is highly illegal.
The 'index annuities' you're proposing to regulate, have, by your own regulatory agency, been described as a 'non security' upon several past efforts by NASD/FINRA to coerce your agency to regulate them. Why is the SEC now changing their position? Again, the SEC is clearly being paid by the securities industry to deliver this decision.
The SEC decision is overreaching. The SEC is attempting to regulate an insurance product, which is fixed in nature, cannot lose principal value, and has linked returns but no direct investment in any securities markets. The insurance industry is regulated by insurance commissioners from each state. Your attempt as the SEC to regulate insurance products not only infringes on each state's insurance department's authority, it is totally out of the SEC's jurisdiction.
The income which will be taken away from financial advisors helping their clients with index annuity solutions, the forcing of insurance agents to get securities licenses (unfair and illegal segregation of insurance agents from the securities industry unless they pass FINRA's exam), unfair and illegal fees which insurance agents will be forced to pay to FINRA and for additional EO insurance, and unfair and illegal regulation which will affect product design and make it more difficult to offer seniors and retirees a solid financial solution (hence index annuities) since that design and the riders will be controlled by FINRA constitute unfair business practices by the SEC and monopolization over the insurance industry.
I have joined a large body of very well capitalized insurance agents who are prepared to file a class action suit against the SEC should the SEC try to enforce securities laws on these insurance products. We have already retained legal counsel on our behalf, who are former SEC attorneys. We will not accept an arbitration from the SEC, but instead will demand a full court trial with full press coverage. I urge the SEC to reconsider their illegal and unfair proposal for regulation of FIXED INDEXED ANNUITIES.
I remain,
Mark S. Kennedy