NASD Notice to Members 96-52 - August 1996

NASD Solicits Member Comments on Proposed Rules Relating to the Sale of Variable Life Insurance Contracts and Variable Annuity Contracts

Executive Summary

The NASD® requests member comments on proposed amendments that would revise existing rules applicable to the sale of variable life insurance contracts and establish new rules applicable to the sale of variable annuity contracts. The proposed amendments incorporate definitions and provisions from the current rules for variable contracts and investment company securities and the proposed rules pending with the Securities and Exchange Commission (SEC) to regulate the receipt of cash and non-cash compensation. The key provisions are a prohibition from favoring or disfavoring the sale of a variable life insurance or variable annuity contract on the basis of brokerage commissions received by a member and a requirement that categories of cash and non-cash compensation that may be received by a member or its associated persons in connection with the sale and distribution of variable life insurance or variable annuity contracts be disclosed in the prospectus.

 

Questions concerning this Notice should be directed to Clark Hooper, Senior Vice-President, Office of Disclosure and Investor Protection, NASD Regulation, Inc., at (202) 728-8325; and Robert J. Smith, Senior Attorney, Office of General Counsel, NASD Regulation, Inc., at (202) 728-8176.