July 29, 2008
Regulating Indexed Annuities as a security is wrong because the customer cannot lose money on the investment, but only through surrender charges, which have nothing to do with the investment side of things.Just because the actual positive gains each period are variable does not preclude regulating them as a security. For example, the amount that an insurance company credits to a fixed annuity varies each year depending upon the return of the insurance company's investment portfolio. Should fixed annuities be regulated as securities too by analogy? I think not. Please stay out of the insurance company arena with your regulations. You would be better off to be more aggressive prosecuting unscrupulous agents for lack of disclosure of the surrender charges