Subject: File No. S7-14-08
From: Larry D. Horn

July 29, 2008

-Dear S.E.C.,

I am a professional insurance agent and have been licensed both with securities and insurance companies for the past 28 years. I dropped my securities license several years ago because NASD, now FINRA, did not do a good job of policing the broker dealers in my opinion. I do not want FINRA to be responsible for policing my industry where there are more than competent policing through the State Insurance Departments. They watch over each insurance company and handle fairly all complaints against any insurance company and or agents.

Several observations that I would like to make:

Your proposal suggest that consumers purchase Fixed Index Annuities, FIA, products for the same reason that they purchase mutual funds and stocks. That is the fartherest thing from the truth. My clients and I believe the majority of FIA contract are purchased for the guarantees they offer, which mutual funds and stocks offer no guarantees. Consumers purchase FIA's for the same reasons they buy certificate of deposits, safety of principal and interest credited.

It is unbelievable that the proposed rule indicates that the purchaser bears the brunt of the risk in FIA's. That is the fartherest thing from the truth. The client bears no risk in these products. With stocks and mutual funds the purchaser most certainly does bear all of the risk, their investment can actually go to zero. With FIA's the worst case scenario for the purchaser is that they would have to pay a surrender charge if they want all of their money prior to the surrender charge being up, but at least they know up front what kind of risk they face, the purchaser of mutual funds and stock has no guarantee what so ever. Beside this, the purchaser has a penalty free withdrawal should they need any liquidity from their FIA.

The SEC suggest that FIA purchasers assume many of the risks and rewards that investors assume, which is not true. The FIA is tied to the market but none of their funds are in the market, no risk, but they do benefit from an increase in the market, should it go up, but no downside risk if the market goes down. Their FIA account can only go up, it can never go down, with the exception of withdrawals. Even their interest credited is never at risk.

The SEC suggest that over size commissions lead to abusive sales practices. An agent may make 8 or 9% up front but over the life of the FIA this is much smaller than what the management fees, commissions and adminstrative cost are for those who purchase mutual funds or buy and sell stocks regularly. This fee is a one time payment for the agent to continue to service the client for the life of the contract, with no additional compensation. When you have registered representatives who have 100% of a 70 year old money in the market that is what needs to be addressed. The fees and commissions over a 10 year period of time can be 20 to 30% and the client still has to assume 100% of the risk.

I will tell you why there is so much interest on FINRA's part to get FIA's registered as a security, its money they are not collecting and they want that money at any cost. FINRA can not even regulate their own industry properly much less take on the regulation of FIAs from the insurance industry. If there was not a considerable amount of lost revenue that FINRA is missing out on then they would have no interest in FIA's.

It just makes me sick when so many of the large broker dealers have been fined heavily, 100's of millions of dollars, because they can not regulate their own industry and are not truly concerned about the well being of the investor they are only concernd about lost revenue.

I believe it would be an injustice to subject FIA's to FINRA regulation. There would be thousands of agents. insurance agencies and wholesalers put out of business, consequently they would no longer be able to service their clients if FINRA is to regulate the industry. Once again the only reason these broker dealers are interested in FIA's is for their own greed These dealers are seeking to gain control of additional sales volume to increase their own profits. This is clearly not about consumer protection because that protection is already in place through the different State Departments of Insurance.

Thank you for allowing me to share my views on this very important, and poorly guided legislation.

Sincerely,

Larry D. Horn