July 21, 2008
It is my opinion that EIA's are NOT securities. The interest crediting rate is based on some formula which is calculated based on the UPWARD performance of an index of securities (eg. SP 500).
The consumer is not buying a mutual fund or some other security where the actual VALUE of the principal is at risk and the total value of the investment is derived from the performance of an index.
If there is any problem with EIA's it is that some of them are so confusing that even the agents that sell them do not understand how the moving parts work. Calling them securities will not solve that problem.