SEC closed the comment period, despite pleas from NAIC, NAFA, and state governors as well as congressmen. Final rule seems likely this year. See your local FINRA exam office soon.
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I thought this WAS a real job!
NASAA Supports SEC Equity-Indexed Annuities Proposal WASHINGTON, D.C. September 11, 2008—The North American Securities Administrators Association (NASAA) today endorsed a proposed rule by the U.S. Securities and Exchange Commission that would subject equity-indexed annuities (EIAs) to regulation under the federal securities laws and would help protect millions of investors across the country, many of them senior citizens, from the fraud and abuse that is taking place in the sale of EIAs.
“NASAA strongly supports the SEC’s proposed rule. ... Although these products are securities, they remain largely unregulated under federal securities law,” said NASAA President and North Dakota Securities Commissioner Karen Tyler.
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In a comment letter filed with the SEC, Tyler wrote: “The proposed rule will enable the SEC to address these abuses with the regulatory tools available under the federal securities laws, ranging from mandatory registration and disclosure requirements to strong suitability standards and antifraud remedies.”
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NASAA said regulating EIAs as securities is “clearly appropriate” from the standpoint of legal and economic analysis. “Contrary to insurance industry claims, EIAs impose significant risks upon investors, including fluctuations in the applicable equity index and potential loss of principal. In addition, issuers and agents routinely market EIAs as investments, not insurance products,” Tyler wrote.
NASAA also pointed out that none of the arguments being advanced against the rule are valid. “State insurance laws alone cannot protect the public from the abuses associated with EIAs. The safeguards they provide are no substitute for the investor protections contained in the federal securities laws,” Tyler wrote.
Further, Tyler wrote, attempts to disparage the rule as part of a regulatory “turf” battle are also wrong. “Critics who level that charge ignore the fact that the rule will not interfere with the continued regulation of EIAs by state insurance commissioners,” Tyler wrote. “The rule expressly provides that it will only apply to EIAs that are ‘subject to regulation under the insurance laws.’ Nor will the rule impose unreasonable burdens on industry. It will simply require compliance with the same regulatory standards that have applied to issuers for the past 75 years. In short, the rule will provide much needed protections for investors without unfairly burdening industry.”
Well, Chris Cox has been a pretty mean and lousy SEC chair, so it looks like he has a murky future. McCain doesn't want him, and Obama will be looking to put some heads on the proverbial platters:
Well, Chris Cox has been a pretty mean and lousy SEC chair, so it looks like he has a murky future. McCain doesn't want him, and Obama will be looking to put some heads on the proverbial platters:
This strengthens my opinion that the SEC is trying to finalize Proposed Rule 151A in 2008. That's why they did not extend the comment period, despite pleas from the NAIC, NAFA, and even state governors and U.S. Congressmen. They're proceeding on course.
They probably don't want to wait for a new US Prez to change directions.
It makes them look better, having taken a firm stand.
I have recently started to come across seniors purchasing index linked CD's. To my knowledge theses are not FINRA products, but bank products. Is FINRA making a big deal of these too??
I tell you seniors are not paying attention to theses either. I had a gentlemen show me one that pay between 1 and 15% for 5 years based on a basket of 10 stocks. He thought he was in heaven having a chance to make 15% with no risk. What he failed to figure out was if he took his possible 15% and divided it by the 5 years, his max interest if the index performed was 3% a year.
I have recently started to come across seniors purchasing index linked CD's. To my knowledge theses are not FINRA products, but bank products. Is FINRA making a big deal of these too??
I tell you seniors are not paying attention to theses either. I had a gentlemen show me one that pay between 1 and 15% for 5 years based on a basket of 10 stocks. He thought he was in heaven having a chance to make 15% with no risk. What he failed to figure out was if he took his possible 15% and divided it by the 5 years, his max interest if the index performed was 3% a year.
So the absolute most he could make was 3% a year over 5 years? Unreal. I bet the things have expenses too.
This is nothing more than a power grab by the SEC. If you look at the track record of EIA's over the past decade as compared to the overall markets - anyone in an indexed annuity has done better.
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A.M. Hyers
Hyers and Associates, Inc.
Saying that 151a is a "power grab" is a common soundbite. But 151a requires reporting to state insurance departments, not the SEC. The track record of the SEC back to 1986 shows that they've always thought indexed products were securities, and said so when they released the original Safe Harbor Rule (Rule 151).
Re: Why I think FINRA is behind it
NASAA is behind it
Crossing the Line into Securities
Linear Mode
