Notice to Members 06-38

Member Obligations with Respect to the Sale of Existing Variable Life Insurance Policies to Third Parties

Sales of existing life insurance policies to third parties—often referred to as "life settlements"—have grown exponentially in recent years, and that trend appears likely to continue. The purpose of this Notice is to remind firms and associated persons that life settlements involving variable insurance policies are securities transactions, and firms and associated persons involved in such transactions are subject to applicable NASD rules.

Questions regarding this Notice may be directed to Eric Moss, Vice President and Director of Emerging Regulatory Issues, at (202) 728-8982; or Laura Gansler, Associate General Counsel, Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8275.