November 17, 2008

Subject: File No. S7-14-08

SEC -

As a financial services practitioner licensed as an insurance broker in California, a non-resident agent in Oregon, and as a registered-representative with a broker-dealer, I feel that significant harm will be brought to consumers should rule 151a be adopted and therefore the proposal should not be instituted.

Mortgage backed securities have caused the world's financial sevices sector and economies significant harm. There is no need to make insurance products that are not directly tied to financial markets under the purview of the department that currently oversees products that have lost investors billions and perhaps trillions of dollars.

The products over which the SEC is seeking to gain regulation are currently regulated at the state level. To my knowledge, no fixed index annuity has lost one cent due to market fluctutions, unlike the securities that the SEC currently regulate. Therefore, this measure is misguided: clearly there needs to be more regulation of 'real' securities to avoid such destruction of wealth while products that have not lost money for their account holders, such as fixed index annuities, should be looked to as models for how to avoid massive wealth destruction.

It is true that some fixed indexed annuities have returned less to their account holders than account holders put into the vehicles. This phenomenon is generally due to surrender charges and market value adjustments. These elements of fixed indexed annuities are required to be fully disclosed before clients purchase these products. I agree with the steps already taken by insurance companies and state regulators to fully ensure client understanding of the products they are considering to purchase. Positive change has already occurred in the annuity markets due to ethical insurance agents, insurance carrier proactivity, state regulation, and intervention by attorneys general to advocate for annuity clients.

If passed, this measure would significantly reduce the number of financial providers of these products because of the additional overhead and administration needed. Reduced client choices and fewer safe financial products is something that the SEC should absolutely avoid in these times of severe economic circumstances. The need for safe products that are not in directly invested in the markets is very important at this time and due to the reduction in these products that would ensue if 151a is passed, this proposal should be scrapped.

In the absence of a clear need for further regulation and oversight of fixed indexed annuities as well as for the sake of consumers, I strongly urge that 151a is not adopted.

Thank you,

Christopher L. Arnold, CFP, ChFC, CASL
Principal of Christopher Arnold Insurance Agency
San Francisco, CA

Christopher L. Arnold
Christopher Arnold Insurance Agency