Labor & Employment Law

SEC Rule 151a Fixes A Problem

By Dobin & Jenks

I have mentioned in the past that my distaste for Equity Indexed Annuities runs deep. I wondered aloud how a market-based product could be sold by someone with a securities registration. I would like to think that the SEC cares what I think, but I would be wrong. However, SEC Rule 151a went into effect in December and the Index Annuity folks are hopping mad.

They have a website, SEC151a.com, to plead their case. But what struck me most when reading their materials is the first page, which encourages its members to not get registered with either a Series 6 or Series 7. The authors of this site are discouraging people from the additional oversight that having a supervising broker/dealer would bring. Of course, that would likely mean another layer of overrides and reduction in income.

In my view, it would also lead to fewer inappropriate EIA sales. When I last blogged on this topic, I received an email from an annuity marketer taking me to task for blasting this "wonderful" product. It was all I could do to prevent myself from laughing (actually I did laugh). It's real simple in my mind. If you're selling something that relies on the stock market's performance to determine the performance of the underlying investment, you should be registered to sell securities.

Start sharpening your pencils, folks, and please bubble inside the circle only.

That's the view from The Law Planet, Jupiter, Florida.

Full post as published by The Law Planet Blog on February 03, 2009 (boomark / email).