August 27, 2008
Florence Harmon
Acting Secretary
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-0609
Florence Harmon:
I am a licensed insurance professional. I am writing to you because I support the adoption of proposed Rule 151A, which would classify most indexed annuities as securities. In addition, I hope the application of proposed Rule 151A would limit indexed annuities and other annuity and insurance products that happen to fit the criteria set out in the rule within the scope of the rule. I urge you to pass the proposal because there has been too much abuse thus far in the manner non-securities licensed agents have aggressively marketed to seniors. Equity indexed annuities are very misunderstood and confusing for consumers. Peter Katt at www.peterkatt.com can support that comment in detail. An option for passing this rule is to require sellers to be 6 & 63 licensed.
I firmly believe that people who promote unsuitable sales and engage in misleading sales practices should be aggressively prosecuted and subject to meaningful sanctions. So much of this is happening in the St. George area as an example, with non-securities licensed insurance agents here, claiming 18% guarateed returns in the first year (The Spectrum- August 17th "One for the Money" advertisement).
Concerns about suitability, disclosure and marketing methods are valid and are somewhat relevant criteria for determining whether a financial product is or is not a security. Although properly structured indexed annuities do not share the same investment risk as investment products such as mutual funds and individual stocks, an indexed annuity risk in the related index, rests with the issuer of the product and not the consumer. The "delivery mechanism" of the indexed annuity needs to be controlled with this proposed rule.
In my opinion, equity indexed annuities should not continue to be treated as insurance products, and those who market such, need 6 and 63 licensing along with more education and training. Too many agents don't know what they are selling when it comes to equity indexed annuities.
For these reasons, I urge the SEC to pass the proposed rule. Thank you for your consideration of my views on this matter.
Sincerely,
John L. Johnson