From: John Dardis
August 5, 2005
Jonathan G. Katz
I am a licensed insurance professional and variable product salesperson and a principal of my firm. I am writing to you because the principal review requirements and suitability standards contained in NASD proposed Rule 2821 might be necessary, but are unworkable as presented. The Principal review timeframe cannot easily be accomplished and if a Principal takes more than the required period to review, he could well be in violation of another rule requiring prompt forwarding of the customer investment. While the intent is to allow more meaningful review and additional protection to consumers ,the execution of the proposal is fraught with impractical steps. In addition, the timeliness on the part of the insurance provider does not fit the norm of order execution since the timeframe of the investment of the funds varies from vendor to vendor.
I also firmly believe that people who engage in misleading sales practices should be aggressively prosecuted and subject to appropriate sanctions.
The requirement for review by a principal found in the proposed rule would appear to present a bias against these products. These requirements may lead to constant second guessing of advice and recommendations (based upon less first hand information than was available to the sales person) which requires more time than proposed for review.
While the NASD may not have statistically quantified the scope of the problem, in my opinion, there are instances of non NASD licensed insurance persons utilizing deferred index annuities inappropriately. As proposed this rule needs to have addressed the concerns of those opposed byresponding to the comments received by the NASD. For these reasons, I urge the SEC to disapprove NASD proposed Rule 2821. Thank you for your consideration of my views on this matter.