July 14, 2008
For the life of me, I simply cannot understand why the SEC is proposing to regulate index annuities as securities. Especially since so many individuals have been harmed by the brokerage industry in the past. In the book " The Lies About Money", the author, a well respected financial consultant, sites over 400 NASD or SEC inquiries of illicit behavior of the part of mutual funds and stockbrokers.
The insurance industry has had no Bernie Ebbers, no Michael Millken, no Kenneth Lay, no Enron, Global Crossing, no Tyco.
The insurance industry has never been responsible for wiping out the savings and investments of thousands of people. We have never forced a retiree back into employment due to meltdowns in the stock market, and outright lying and fraud.
Before the SEC tries to regulate the insurance industry, it needs to clean up its own oversight, or lack thereof.
Look, an index annuity GUARANTEES the principal investment- or more properly, the initial premium. Most of a client's money is invested in the general account of the insurance company to GUARANTEE the premium. The balance is used to buy call options against an index. If the call options pay off, then the client benefits from a higher credited interest rate. If not, the client still can lose NO money.
Is this not the principle of insurance?
I realize that the broker dealers are chompimg at the bits to have the SEC rule index annuities as securities. This would simply mean more revenue for them. The brokerage industry would love to drive the many competent insurance licensed only agents out of business. Why? So naturally, they could gennerate more revenue. The SEC certainly has a lot to gain in the form of increasing fees.
Rule 151 is a ridiculous grab for power and should be voted down.
The state insurance commissioners have, for the most part, done a marvelous job of regulating the index annuity business. They have put stringent controls in place to guarantee that no one, especially seniors, are sold an inappropriate product. Can the same be said of the brokerage industry, where many seniors are 100% invested in stocks? I think not.