Subject: File No. S7-14-08
From: Patrick C McCormick
Affiliation: Past US Small Business Advisory Council co - Chairmen

July 8, 2008


Subject:Proposed ruling 151A (S7-14-08)
Date:Tuesday, July 08, 2008 9:44:39 AM
View Source
To: The SEC
Comments to proposed ruling 151A (S7-14-08)

From: Patrick C McCormick
Past Chairmen
US Small Business Economic Advisory Council
appointed by President George Bush


Dear SEC,

I wish to protest your findings on the proposed rule 151A which attempts to make Fixed Index Annuities a Security. I base my protest on several factors that follow.


An annuity must have a guaranteed value be tax deferred, and be a product of low risk to clients. All of these factors are met by Fixed Index Annuities, and therefore qualify as an annuity per the Supreme Count and SEC. The SEC's new position that Fixed Index Annuities are being marketed to Senior Citizens in the wrong way is not one of the requirements needed to be an annuity, and is not a justifiable reason to make it a security. That is cause for the State Prosecutor to take action and rid the "Few bad weeds" out of business, but we should put blame where it belongs, in the District Attorneys office for failing to prosecute these few bad apples.

My next concern is what effect your desired ruling may have on our economy since their are approx. 1.5 million Insurance agents in the United States, of which approx. 150,000 do no hold security licenses, generally due to their lower incomes. The ruling would have a tremendous impact on minorities reducing their potential income by half, and placing many out of work. This is not the time in our economy to take such drastic measures. I find this ruling targeting minorities making a decent living and object to its passage.

I am also concerned about representative Nash voting on this issue she has had past discussions with FINRA chairmen and the AARP Chairmen, and those issues were about this specific legislation. She should be removed from ruling.

As to the Dateline piece I have worked in this industry 22 years and never witnessed these type of scams, so I agree with the Chairmen that these are "a few bad apples". Again this is a State issue, and should be handled as such.

As to senior citizen complaining about Fixed Index sales almost all the complaints received their money back within weeks, which would not have happened in the security world. It would have gone thru arbitration cost them legal fees, and been delayed at least a year before it was settled. I don't see how making it a security will help seniors? Additionally FINRA has taught registered Reps how to combat Fixed Index sales thru false presentations such as showing clients the Dateline tapes once viewed by the clients they generally want their money back, and an industry such as Insurance is an easy refund. Maybe the SEC should look closer to FINRA's tactics, such as declaring to all registered reps they "may be selling away" if they offer these products, truly a way to give these reps a letter they can use to show clients, and scare senior from buying these products.

Let get to the real facts the Nasd changed its name to Finra knowing they would push/attempt for this change, and has lobbied hard for it passage. Finra sales are grossly down due to the economy, and taking over the sales of fixed index annuities would save their private monopolized business. Funny how Fixed Index complaints have dramatically increased since Finra changed it names, just maybe thats because Finra is pushing people to complain Maybe the SEC should investigate Finra's practices, and leave fixed indexes alone What Finra has done thru advertising and letter campaigns makes the Dateline presentation look honest. They have used TV radio, and wall street to pass out misleading information about Fixed Index annuities, and the SEC has done nothing.


As a continued education instructor in three states we have always used a pie chart passed out by the old NASD that showed how investments should change as one gets older, basically moving to safer investments with age. Currently FINRA believes seniors should have all of their money invested in the market in some way, all one has to do is review any suitability form and its obvious. Why did the pie charts change, and by who's authority? Finra is currently the senior citizens number one abuser, with six times as many complaints as the Fixed annuity business, yet no one does anything. Wake up SEC, you don't give the keys to the barn to the wolf. I have never in 22 years found any client that owns a Mutual Fund that can inform me how they are invested, never. Clients have no clue how an International Funds, Growth Funds, or Income Funds work. Yet something that is completely understandable such as a Fixed Index annuity draws you attention, why?

In conclusion I oppose this ruling, it is prejudice to lower income minority producers, I oppose Finra's constant misrepresentations, and believe the Supreme Courts ruling that states Fixed Index annuities are annuities is correct. I further believe that senior citizens are best served by withdrawing this ruling. I further believe Finra is a monopoly, and should have fair competition.



Patrick C McCormick
President
McCormick Financial Products, LLC
800-272-7181
fax 908-689-8723
www.mccormickfinancialproducts.com