October 16, 2008
I have previously submitted comments regarding my opposition of this proposed rule. I would like to add to the comments already given.
Reviewing the comments here, there seems to be either a vast misunderstanding of these insurance products by the majority of licensed registered representatives under the SEC/FINRA umbrella. Either they have no concept of how these products actually work, or they are misrepresenting these products to sway opinion of those who would consider implementing this proposed change.
I wouldnt expect the majority to understand these products, as many of the registered representatives with the SEC are not insurance licensed. The ones that are also insurance licensed have more factually based and persuasive arguments for the proposal, although, by reviewing the comments here, it appears the majoroity of security licensed agents who are also insurance licensed are against this proposal.
For those that are not insurance licensed, or who have not fulfilled the necessary requirements on annuities: How can you comment on products you dont understand? How can you comment on the regulations in place when you have no knowledge of those regulations? I can only guess that you have based your comments on the releases of FINRA and the SEC, or that you are choosing to ignore or disregard them.
The details of just how unbelievable flawed this proposal is have been stated numerous places. I dont want to restate what others have stated so well, but to summarize:
The proposed rule is rife with vague, unsupported, and unsupportable claims, contradictory statements of both intent and consequences of this proposed rule, and a complete lack of research regarding the issue. Additionally, this proposal attempts to supercede all legal case precedent regarding the classification of Indexed Annuity Products – including the decisions of the Supreme Court.
Many of the facts have been thrown out of the proposal, to be replaced with emotional call for action, because the facts do not support the proposed rule. In fact, the proposal completely discounts all state insurance regulation except to note they do regulate insurance company solvency. This is deceptive and blatantly false. The claims of mass abuse are not valid without hard evidence, which seems to be lacking in any of the emotional appeals made in the proprosed rule or in the comment section. Actual complaints of abusive sales practices - those lodged with the individual state insurance departments - do not support your claims.
This proposal is another example of the failure of the SEC, who is supposed to do its own due diligence – specifically failure to meet the standards set forth by Congress to engage in rigorous analysis of porposed rules which govern its underlying mandates (in terms of efficiency, competition and capital formation).
More examples of this failure is seen in the number of court cases rejecting the SEC grab for power, the FAILURE to regulate the largest and most influential corporations in America which has led us to the current implosion of the credit markets, the destruction of capital, and the incredible loss to the majority of Americans retirement accounts. Failure to ask the tough questions of Leman Brothers, AIG, Morgan Stanley, Merrill Lynch, and others has brought the world economy to a grinding halt and worse, put us on the brink of disaster. If this is the type of regulation the SEC proposes, then the country is far better off without it, even if their was supporting evidence or facts to advance this proposal.
When registered broker/dealers are telling people to take out more equity out of their homes and put those funds into the market, where those funds have declined over the last five months by 37% - 40%, its another example of the SEC not performing their mandates duties.
Meanwhile, the insurance industry, including the AIG insurance subsidiaries, ALL state insurance departments and licensed, trained agents, have continued to perform their duties for the benefit of their clients and constituents. We are protecting the hard-earned accounts, including retirement accounts of our clients.
There have been no revisions or additional data to support this proposal. I would call on the SEC to collect the necessary data and revise the proposed rule, or withdraw it at this time. I think the time and expense of dragging this out further, possibly into the courts, would be a waste of time and effort at a time when we should be concentrating on doing the best we can for our clients and the country.
Sincerely Yours,
Steve Rutkowski