From: Lee P. Thaete
Lee P. Thaete
August 5, 2005
Jonathan G. Katz
II am a licensed insurance professional, a variable product salesperson, registered to offer securities and investment advisory services in several states, and also a securities principal. I am writing because the principal review requirements and redundant suitability standards contained in NASD proposed Rule 2821 are unnecessary, will provide no meaningful additional protection to consumers and will adversely impact my business.
The SEC should NOT approve this new NASD rule. If regulators really want to protect consumers, appropriate enforcement of the existing suitability rule rather than adopting a new rule is the answer. I firmly believe that people who engage in misleading sales practices should be aggressively prosecuted and subject to appropriate sanctions.
Proposed Rule 2821 duplicates requirements that are already in place.
Over 95 percent of the comments received by the NASD regarding the proposal opposed the new rule. The NASD has not statistically quantified the scope of the problem it is allegedly seeking to solve with the proposed rule, nor has it responded to concerns raised by the vast majority of commentators.
As I see it, this NASD proposal is a "solution in search of a problem"—I do not think the available data supports the NASD's claims that the level of sales problems in the variable annuity marketplace calls for the adoption of the proposed rule. In recent years, roughly 8 % of NASD’s total annual disciplinary actions concerned variable annuities and the people selling VAs, despite the fact that registered representatives working for broker/dealers affiliated with life insurers, i.e., variable product salespeople, make up over 50 percent of the total population of registered representatives.
For these reasons, I urge the SEC to NOT approve NASD proposed Rule 2821.
Lee P. Thaete, ChFC, CLU, CPA