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NASD, SEC Drafting New Regulation on Variable Annuities

On June 9, 2004, the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC) issued the draft of a new regulation...
June 15, 2004

On June 9, 2004, the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC) issued the draft of a new regulation that would require brokers and insurance companies to provide more complete explanations of the risks associated with variable annuities.  The new rules would require sellers of variable annuities to give easily understood explanations about the investments and obtain approval from a supervisor for each sale.  The variable annuity industry has 60 days to respond to the proposal. 

The regulators also released a report on abusive sales practices and expressed hopes that brokerage firms and insurance companies would take voluntary steps to change the way variable annuities are marketed.  The regulators said in addition to not being fully informed of risks, investors often complained that they were unaware of the substantial penalties imposed for early withdrawal. The regulators did not name any brokerage firms or insurance companies as having violated regulations but said that several firms, brokers and insurance agents were being investigated.

NASD/SEC Reports (6/9/04)

What It Means to Agents:  We are passing this along only as an FYI at this point. We will have more to say as this develops.

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