From: Anonymous
Sent: Tuesday, August 15, 2006 3:47 PM
To: Rule-Comments
Subject: SR-NASD-2004-183

I find it appalling that the NASD is spending so much time on an issue that is a non issue. If the NASD or the SEC actually think Variable Annuities are not a good idea then outlaw them. I think clients that have experienced the death benefit guarantee and have experienced a lifetime income stream might find great fault with such a move. Admittedly products of the past were not as good as they are today but neither were the automobiles of yesteryear.

I am a licensed insurance professional and variable product salesperson. 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 and will adversely impact my business. 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. The NASD, however, has failed to adequately justify the need for the proposed rule. To the contrary, the available data does not support the NASD's claims that the level of sales problems in the variable annuity marketplace calls for the adoption of the proposed rule. 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. Furthermore, the vast majority of the comments received by the NASD and SEC regarding the proposal opposed the new rule, and the NASD has not adequately responded to the concerns raised by the vast majority of commentators.

Furthermore, proposed Rule 2821 duplicates current supervision and suitability requirements that are already in place. NASD rules (including Rule 2310) already contain suitability requirements that apply to all sales of securities, including variable annuities. If regulators really want to protect consumers, appropriate enforcement of 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. This requirement appears to present a bias against these products, and will lead to constant second guessing of my advice and recommendations (based upon less first hand information than was available to me).

The NASD proposal is a solution in search of a problem that could ultimately harm consumers by making these products less available to people who could benefit from them. For these reasons, I urge the SEC to disapprove NASD proposed Rule 2821.

It would be nice if you actually solved a bigger problem instead of this issue. How is it that the NASD has gotten all this power? That is a bigger issue. They can set their own rules, have very little oversight and continue to frustrate the entire industry.

There are plenty of laws to use against criminals. Name just one of your laws that stopped the problems at Enron. What about World Com? All your little rules have done nothing compared to the damage just two of these companies did to innocent people. Your rules stifle the type of honest and dedicated work that we do. We certainly have some bad apples in our midst and you should certainly go after them. But you also have innocent God Fearing good people trying to do the right thing and you have them so scared they don't make more aggressive recommendations even though the client will be fighting inflation risk and potentially running out of money. How are you going to justify that? Please do the right thing on this issue and open a forum for more detailed debate about our industry. I would volunteer to help you see some of the bigger issues facing our industry and ways we can offer serious protection to the consumer.


John Blackman