Comments on NASD Notice to Members 04-45

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Dear NASD:

 

I am writing to urge you to withdraw your proposed new suitability rule for broker-dealers who sell variable annuities. The proposal would create duplicate supervision and suitability standards.

 

Broker-dealers who practice unscrupulous sales practices should be punished accordingly. But the NASD proposal duplicates rules that are already in place. A variable annuity.s prospectus.which is reviewed by the SEC.details the product.s fees, risks, and rewards. In fact, the life insurance industry worked closely with the SEC to ensure that prospectuses are clearly written and informative.

 

Moreover, the prospectus is written by people who understand the product best.the company that is backing the policy. Broker-dealers are not suited to rewrite a prospectus. Furthermore, requiring the delivery of additional documents will reduce the likelihood consumers will read the prospectus.the most important material about the product.

 

NASD says it is trying to protect consumers. interests, but the way to accomplish this is not to add duplicative requirements. Rather, the NASD should aggressively enforce laws that are already on the books. This is the best deterrent against inappropriate conduct. By encouraging broker-dealers to urge consumer.s to read a variable annuity.s prospectus carefully, the NASD will still be protecting consumers. interests.

 

The expense of the proposal greatly outweighs its benefit and it should be withdrawn.

 

Thank you.

 

Sincerely,

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