I am a licensed securities and insurance professional. I am writing to you concerning the suitability standard and principal review requirements pertaining to the sale of variable annuities contained in NASD proposed Rule 2821. Although the latest NASD proposal includes several amendments made to earlier versions of the proposal, the proposed rule's requirements are redundant, unnecessary, will provide no meaningful additional protection to consumers. I urge the SEC to disapprove the proposal.
I firmly believe people who engage in misleading sales practices should be aggressively prosecuted and subject to appropriate sanctions. However, unsuitable variable annuity sales made up less than .50 percent of the NASD's disciplinary actions over the last five years, and complaints about mutual funds and individual securities far outnumber those concerning variable annuities.
Regulators wanting to protect consumers already have sufficient enforcement guidelines with the existing suitability rule, rather than adopting a new rule is the answer.
In addition, the requirement for review by a principal found in the proposed rule deviates in several significant ways from the general supervision requirements found in Rule 3010.