November 17, 2008
Dear Chairman Cox,
Closing today at 851(11/17/08), the SP 500 index has lost 45.6% since its 10/9/07 record high. Along the way, Americans have once again absorbed 8+ TRILLION in losses. As you well know, that is the second time this has occurred in the last decade.
This time, well over 2 TRILLION has been lost in retirement accounts. Much of those losses have been incurred by retirees on fixed incomes, and for way too many people, those losses will never be recovered.
As you also know, the past 30 years has witnessed the decline and (what will be) the eventual demise of defined benefit pension plans. As a result, retirement income security has become one of the major issues facing our society.
13-14 years ago, the insurance industry first introduced what was inappropriately named the "Equity Index Annuity". Today, these products are universally called Fixed Index Annuities.
These products have evolved to become one of the cornerstones of retirement income security for millions of Americans.
Proposed Section 151A would negatively effect more widespread distribution of these products, thus preventing more of our citizens from obtaining security during retirement.
Insurance companies, Insurance Commissioners, and many others have written the SEC with scholarly treatises contending that these products are not securities, and that people selling them should not be required to be securities licensed.
I will not cover that same ground.
I simply want to point out that not a SINGLE DIME of FIA owners money has been included in the over 16 TRILLION dollars lost by investors in stocks, mutual funds, bonds, options, futures, derivatives and other APPROPRIATELY CHARACTERIZED SECURITIES over the past nine years.
While one may argue that some agents present FIA's as an investment, most agents do not. To penalize the American public for the actions of the few, makes no sense.
FIA's PROVIDE SECURITY. THEY ARE NOT SECURITIES. Americans would be well served by their Government if the SEC allows 151A to die quietly.
Let the Insurance Companies and Insurance Commissioners in the various states police market place conduct.