From: Arthur Sobczak
Sent: August 5, 2005
Subject: File No. SR-NASD-2004-183

Arthur Sobczak
14718 Camden Drive
Strongsville, OH 44136

August 6, 2005

Jonathan G. Katz
Secretary, Securities and Exchange Commission Securities and Exchange Commission 100 F Street, NE Washington, DC 20549-9309

Jonathan Katz:

I am writing to you to urge the SEC to disapprove NASD proposed Rule 2821.

I have been in the financial services business for nearly 24 years. I hold all the appropriate life insurance licenses and I hold NASD registrations for Series 6, 63, 22, 7, and 24. I am here to tell you that increased rules and regulations from the SEC regarding variable annuities is not the answer to a problem that, quite frankly, isn't the problem some regulators are making it out to be. In recent years NASD disciplinary actions concerning variable annuities and the people who sell VAs have constituted roughly 8 percent of the NASD's total annual disciplinary actions, despite the fact that registered representatives working for broker/dealers affiliated with life insurers--i.e., variable products salespeopleómake up over 50 percent of the total population of registered representatives.

I appreciate the fact that the NASD may want a "show of strength" on the issue of suitability with regard to variable annuity sales, however, adopting new rules just isn't the answer. There are already abundant rules and regulations surrounding suitablity of not only VA's but any investment. Much of my work is done with registered representatives in traditional wirehouses. I can tell you from first hand experience that these such firms are fully aware of the rules and have implemented a great many internal checks and balances to ensure suitability. I also work with insurance company based registered representatives. The quality of the local compliance review for suitability is far and away greater than some regulators may make it out to be.

Certainly, people who engage in misleading sales practices should be aggressively prosecuted and subject to appropriate sanctions. However, adding new rules is not the answer to a relatively small problem.
Enforcing current rules is the solution.

Furthermore, the requirement for review by a principal found in the proposed rule appears to present a bias against these products. As a principal, this rule will force me to second guess the registered representatives' recomendations. If he is following the current rules for suitability and is abiding by the tried and true NASD suitability mantra of "know thy customer", then proper recommendations will be made. If principals simply ensure that the current rules are being followed, there is no need for the intrusion caused by this proposed rule.

For these reasons, I urge the SEC to disapprove NASD proposed Rule 2821.

Thank you for your consideration of my views on this matter.


Art Sobczak, CLU, ChFC