NASD, Minn. Department of Commerce to Host Annuity Roundtable, May 5

March 23, 2006

NASD and the Minnesota Department of Commerce will co-host an Annuity Roundtable in Washington D.C. on Friday, May 5.

Participants will include a cross section of federal and state regulators, securities firm and insurance company executives, and consumer groups.

The Annuity Roundtable, will consist of two panels. The first will explore the complexity of annuity products, trends in the development and marketing of those products and disclosure, suitability and marketing issues.

The second panel will examine the fragmented nature of annuities regulation, the differences in current regulatory approaches by federal, state and NASD regulators, and how regulators can align those approaches to better serve and protect investors.

“This Annuity Roundtable will bring together regulators and others interested in annuities to discuss how to improve the protections investors receive when these complex products are marketed and sold,” said Rober R. Glauber, NASD chairman and CEO.

“Be they fixed, variable or equity-indexed, annuities are among the most complicated retail investment products on the market, and they are particularly troublesome from a regulatory standpoint,” Glauber said. “The Securities and Exchange Commission, NASD and some state securities regulators have jurisdiction over sales of variable annuities. State insurance commissioners have jurisdiction over sales of fixed annuities. Equity-indexed annuity sales are a jurisdictional jump-ball, because it isn’t clear whether they’re securities, insurance products or something in between. The three annuity types are really three versions of the same product. It simply is not fair to investors that the level of disclosure and protection they receive should vary depending on which agency regulates the version of the product they’re buying.”

Glauber emphasized that NASD is not proposing new rulemaking of its own or any expansion of its regulatory jurisdiction. “We are proposing a concerted effort by all interested parties to bring the rules governing sales of all types of annuities into line and leveling the investor protection playing field among these products,” he said. “This is about harmonizing and clarifying disparate rules, not about seeking to change regulatory turf.”

“From the standpoint of a department which regulates both securities and insurance, the Minnesota Department of Commerce sees this roundtable as a stepping stone to improving collaboration and cooperation among financial service regulators,” said Minnesota Commerce Commissioner Glenn Wilson. “Modernization of the regulatory framework to keep pace with marketplace and product evolution must be undertaken to ensure that consumers are protected. We believe that this is an important forum to continue that effort.”

Roundtable participants will include Securities and Exchange Commissioner Annette Nazareth; NASD Vice Chairman Mary Schapiro; North Dakota Insurance Commissioner James Poolman, who serves as chairman of the Life Insurance and Annuities Committee of the National Association of Insurance Commissioners; Wisconsin Securities Administrator Patricia Struck, who also serves as president of the North American Securities Administrators Association; Frank Keating, president and CEO of the American Council of Life Insurers; Mark Mackey, president and CEO of the National Association for Variable Annuities; Barbara Roper, director of Investor Protection for the Consumer Federation of America; Sharon Hermanson, senior policy advisor for the AARP; a member of the staff of the House Financial Services Committee, and industry representatives from such firms as Prudential, AXA Financial, ING Advisors Network, LPL Financial Services, UBS Financial Services and American Equity Capital.

NASD identifies itself as a private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.

Source: NASD

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