From: John Kloempken
Sent: July 14, 2006
To: rule-comments@sec.gov
Subject: File No. SR-NASD-2004-183


Dear Sir or Madam:

I was contacted by the NAIFA in reference to the above file. I have read the sample comments and could do no better in expressing my belief the rule should not be approved. Frankly, you are imposing so very very many requirements on financial representatives that you are impeading communication rather than fostering it. It is tragic. Your purposes seem to be to have financial representatives essentially tell prospective clients that anything said can't be trusted and you should not entertain obtaining the protection you need to provide for a comfortable retirement or protection for your children. It really is tragic.

Here is what the NAIFA suggested and I agree with their position!

I am a licensed insurance professional and variable product salesperson. I am writing to you concerning the suitability standard and principal review requirements pertaining to the sale of variable annuities contained in NASD proposed Rule 2821. Although the latest NASD proposal includes several amendments made to earlier versions of the proposal, the proposed rule's requirements are redundant, unnecessary, will provide no meaningful additional protection to consumers and will adversely impact my business. I urge the SEC to disapprove the proposal.

I firmly believe people who engage in misleading sales practices should be aggressively prosecuted and subject to appropriate sanctions. The NASD, however, has failed to adequately justify the need for the proposed rule. To the contrary, the available data does not support the NASD's claims that the level of sales problems in the variable annuity marketplace calls for the adoption of the proposed rule. Unsuitable variable annuity sales made up less than .50 percent of the NASD's disciplinary actions over the last five years, and complaints about mutual funds and individual securities far outnumber those concerning variable annuities. Furthermore, the vast majority of the comments received by the NASD and SEC regarding the proposal opposed the new rule, and the NASD has not adequately responded to the concerns raised by the vast majority of commentators.

Furthermore, 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. If regulators really want to protect consumers, appropriate enforcement of the existing suitability rule rather than adopting a new rule is the answer.

In addition, the requirement for review by a principal found in the proposed rule deviates in several significant ways from the general supervision requirements found in Rule 3010. This requirement appears to present a bias against these products, and will lead to constant second guessing of my advice and recommendations (based upon less first hand information than was available to me).

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. For these reasons, I urge the SEC to disapprove NASD proposed Rule 2821. Thank you for your consideration of my views on this matter.

John Kloempken, JD, MBA
Financial Services Representative
Registered Representative
Chicago North Financial Group,
An Office of MetLife

500 Park Boulevard, Suite 400
Itasca, IL 60143