Subject: File No. S7-14-08
From: David Scott
Affiliation: Registered Representative, Licensed Insurance Agent

June 28, 2008

I find it ridiculous that the SEC would consider registering and regulating fixed indexed annutiies as securities. While some of the crediting options within fixed indexed annuity are tied to the performance of certain market indices, there is no risk to the client of account value decline due to market decline. Furthermore, many fixed indexed annuities allow for an annual reset feature on the anniversary date, resetting the new index starting point for each contract year. While this feature resets the index crediting starting point higher in up markets, it resets it lower in years where the market indices decline. This differs significantly from securities whereby the most important price is the initial "buyin" price, without any reset feature. In down market years, the client would have to recover to the original buyin price just to break even, and exceed it to see gains. I strongly believe that agents recommend and clients purchase fixed indexed annuities to achieve greater potential gains than other secure principal products (traditional fixed annuities, CD's etc)without the risk of losing principal to declining markets. To register and regulate fixed index annuities as securities simply because they allow for positive crediting based upon market indices is faulty thinking, as I believe "true securities" actually invest in the market, allowing for both gains and losses based upon market performance. Investors in securities choose to invest in them for greater protential gains, while also understanding that there exists a potential for losses as well. Fixed indexed annuity investors invest for the potential gains while sidestepping losses in declining markets. To me this is apples vs. oranges. I believe that as long as proper suitablitity rules are followed, fixed indexed annuities will remain an excellent vehicle for clients to place a portion of their assets without having to register and regulate them as securities. What's next, the registering and regulation of traditional fixed annuities as securities? It's time for the brokerage community to stop their crying and either get their insurance licenses to begin offering this vehicle, or quiet down and allow those who do offer it to their clients.