Dear Nancy M. Morris:

Iím writing to voice my opposition to the NASDís proposed regulations on specific suitability and principal review requirements for deferred variable annuities.

Iíve been a licensed insurance agent and series-7 registered representative for over twenty years. Iíve seen first hand the abuses that occur in the market place, and I believe in the need to rigorously enforce existing general security suitability requirements. However, the proposed regulations will not solve the selling abuses you seek to curb for the following reasons:

    1) Only a small percentage of NASD disciplinary cases relate to the sale of variable annuities when compared to the number of representatives that are licenses to sell these products. The largest and most abundant abuses are actually occurring in the indexed annuity field, which is not covered by the proposed regulations.

    2) Many of the proposed regulations actually duplicate existing general security rules (Suitability Rule 2310 covers all securities). Why not work toward better enforcement of existing rules rather than creating more administrative work that does little to improve the suitability abuses. Moreover, the variable insurance industry is making strides in this area by providing products that are more consumer friendly thereby creating less incentive for abusive sales tactics by agent/reps. Research has shown that the most consumer unfriendly products exist in the fixed insurance area regulated by the various states. Products where the consumer can never obtain their original principle without annuitization, commission schedules as high as 15%, and long surrender periods go unchecked while products sold in the highly regulated securities industry are being singled out for further administrative review that provides little or no additional protection for the consumer. For example, the principal review requirements in the proposed regulations seem to be nothing more than a bias against variable annuities by making the product more difficult to sell while providing little additional consumer protection.

    3) By trying to solve the selling abuse problem through additional administrative burden as opposed to enforcement of abuse under existing rules, the SEC may actually harm consumers by making product less available for those that really need the protections that these products provide.

While the intention of the proposed regulations is commendable, there are better solutions to the relatively small percentage of consumer abuses taking place with these products. For this reason and the other reasons mentioned above, I urge the SEC not to approve NASD proposed Rule 2821.

Thank you for your consideration of my opinion in this matter.

Sincerely,

Perry D. Nocifora, CFP, CRFA
Wealth Management Services, Inc.
12676 Hoover Street
Garden Grove, CA 92841-4173
PH. 714-799-6079
800-466-4737 (toll-free)
EM. Perry@wms-i.com

Securities offered through Transamerica Financial Advisors, Inc., a registered broker-dealer.

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