From: Michael J. Frailey
To: Rule Comments
Sent:July 12, 2006
Subject:File Number SR-NASD-2004-183

I am a variable product salesperson writing to you concerning the suitability standard and principal review requirements pertaining to the sale of variable annuities (as contained in NASD proposed Rule 2821). The latest NASD proposal is redundant, unnecessary, will provide no meaningful additional protection to consumers and will adversely impact my business. I urge the SEC to disapprove the proposal.

One of the first things I look for is adequate justification for rule changes such as proposed. I do not see that 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. Less than .50 percent of the NASD's disciplinary actions over the last five years involve unsuitable variable annuity sales. Complaints about mutual funds and individual securities far outnumber those concerning variable annuities.

Proposed Rule 2821 duplicates current supervision and suitability requirements that are already in place. NASD rules (including Rule 2310) already contain suitability requirements that apply to all sales of securities, including variable annuities. Appropriate enforcement of the existing suitability rule is the answer if regulators really want to protect consumers.

I see that the NASD proposal is a solution in search of a problem that could ultimately harm consumers by making these products less available to people who could benefit from them. I urge the SEC to disapprove NASD proposed Rule 2821. Thank you for your consideration.

Michael J. Frailey