Letters to NASD Members
August 30, 2005
Dear NASD Member:
Back in March, I wrote to encourage those of you who sell mutual funds, 529 college savings plans or variable insurance products to comment on the SEC's Proposed Rule S7-06-04.
If your firm fits that description--and specifically, if your firm sells variable insurance products--I'd like to call your attention to NASD Notice to Members 05-50 posted earlier this month.
Notice to Members 05-50 offers guidance to firms that sell equity-indexed annuities (EIAs). In brief, NASD recommends that firms make sure they have the appropriate supervisory controls in place regarding how EIAs are marketed and sold to investors. While NASD does not take a position on whether EIAs are securities, they have issued this guidance because of the complexity of EIAs and how they may complicate a broker-dealer's supervisory responsibilities. You can read the full notice here.
Incidentally, supervisory controls will be one of the many topics we plan to address at the upcoming NASD Small Firm Conference in Chicago on September 23. I encourage you to join us for timely and spirited discussions about the issues we face. I'm particularly excited about two new sessions being offered--one regarding technology challenges, and the other on developing best practices for small firms of 10 reps or less.
Finally, I want to let you know that we have recently updated our Small Firm Advisory Board page on www.finra.org. In addition to the list of board member names and contact information, you can now read about the board's nomination and selection process.
If you have any questions about the Small Firm Advisory Board, please don't hesitate to contact me at (616) 942-7680 or Vice Chairman Lou Denton at (215) 419-6410.
Small Firm Advisory Board