WASHINGTON, D.C. April 14, 2008—The North American Securities Administrators Association (NASAA) today commended Dateline NBC for its April 13 program, “Tricks of the Trade,” which exposed questionable sales practices that some insurance agents use to sell equity indexed annuities that may be unsuitable investments for seniors.
“Dateline’s producers and correspondent Chris Hansen are to be applauded for shining much needed light on abusive sales tactics deployed by sellers of equity indexed annuities, and for raising awareness among seniors of the risks associated with these complex, high-fee, high-commission products,” said NASAA President and North Dakota Securities Commissioner Karen Tyler. “Millions of investors across the country, many of them senior citizens, need immediate protection from the fraud and abuse that is taking place in the sale of equity indexed annuities.”
Tyler said equity indexed annuities lend themselves to abusive sales practices. “Agents portray equity indexed annuities in very alluring terms, and because these products are so complex, most investors cannot look behind the sales pitch and assess the high costs and significant risks they actually entail,” Tyler said. “At the same time, these investments offer such generous commissions that agents cannot resist selling them, regardless of how unsuitable they may be for investors.”
According to NASAA’s most recent enforcement survey, 34 percent of all cases of senior exploitation reported to state securities regulators involved variable or equity indexed annuities.
Tyler said NASAA also continues to urge the U.S. Securities and Exchange Commission to this year classify equity indexed annuities as securities subject to regulation under federal securities law. “This would go a long way toward ensuring that investors are provided with proper disclosures of all the costs and risks associated with these complex investments,” she said. “It also would deter abuse by subjecting unscrupulous salespersons to strong remedies under the securities regulatory structure”
For more information:
Bob Webster, Director of Communications