November 18, 2008

Subject: File No. S7-14-08

Hello,

I have been involved in the financial services industry since 1984. Virtually the whole time has been as a licensed insurance agent and since 1997 I have also held securities licensure.

I would like to comment on the proposed rule 151A.

To begin, I would like to respectfully point out that the proposal is not supported by any empirical evidence that supports the Commission's claim that widespread abuses in selling the product exist. The Commission cites its concern over improper sales practices as the primary basis for proposing Rule 151A, yet the Commission provides not one single study, research findings or statistical information to demonstrate or suggest that the abuses are endemic or pervasive.

As a matter of fact, my evidence tells me that forty-one states have adopted the National Association of Insurance Commissioners (NAIC) Suitability Model. The NAIC reports that .1% of all complaints filed with state insurance departments relate to fixed indexed annuities… ONLY one tenth of one percent! The logical conclusion indicated by that single statistic, is exactly the opposite of what the commission sees as a problem with abuses in industry sales practices of fixed indexed annuities. Members of the fixed indexed annuity industry, insurance industry groups such as the ACLI, NAIFA, NAILBA and IMSA, and insurance regulators deplore fraudulent, misleading or abusive sales practices as do I. However, would a reasonable person seek additional regulation on a financial product that results in only one tenth of one percent of all complaints?

As a person intimately involved in both the life and securities industries, I have not seen evidence that there have been widespread abuses in selling equity index annuities. As a matter of fact, in my experience in the market place on both sides of the industry (both life insurance and securities) I have seen many, many clients financially injured by securities brokers and advisors, even with the vast and numerous regulations that currently exist. I have never, not even in one single case, seen a consumer injured or have they lost a single penny in a fixed, equity indexed insurance product. I believe these products are absolutely safe and very useful for income and retirement planning.

The Commission's action would restrict public access to an increasingly popular and timely product. Polls taken of many independent insurance agents indicated they would not make fixed indexed annuities available to their consumers if the annuities were registered as securities. Independent insurance agents do not desire to become registered representatives associated with broker-dealers due to the cost and administrative burden relative to requirements that are inapplicable to the business of insurance. I have experienced this in my own practice and know it to be true. The result of agents deciding not to offer this valuable product would therefore limit public access to the product. Your proposed rule’s result would be obviously harmful to the public because it would restrict the availability of a product which provides the opportunity for greater potential interest earnings, while also providing principal and minimum interest guarantees.

Thank you for taking the time to read my letter, consider, understand and thereby come to the logical conclusion that the appeal of indexed annuities is that they are NOT securities and not subject to risk of loss from market activity. The proposed rule 151A would severely limit the availability of a guaranteed insurance product that helps to provide precisely the type of economic security consumers need during this time of significant economic turmoil.

Sincerely,

R Russell Daniel
Sage Capital Financial Advisors
Russellville, MO