Disclosure issues, stemming from advertising by financial advisors, have moved to the New Hampshire legislature in the form of two bills.
The debate has brought with it some questions concerning disclosure of ads involving equity index annuities.
One bill, SB 111, already has passed the New Hampshire Senate and is now in the House. It essentially requires point-of-sale disclosure of a rep’s business relationships. Spearheading it is David A. Kutcher, owner of DAK Financial Group, an Alton, N.H., firm that sells insurance, much of it EIAs, and a small amount of securities.
The other bill, HB 716-FN, has not yet passed either house, but the House Commerce Committee has retained it for summer discussion. The disclosure provision bill would clarify a point about existing disclosure requirements. It is supported by the New Hampshire Bureau of Securities, Concord.
Both initiatives are being promoted as a means of achieving meaningful sales disclosure that reduces confusion among financial product consumers.
Kutcher began pushing for SB 111 after the New Hampshire Securities Bureau cited his insurance ads as violating a securities licensing provision [in RSA 421-B:6, V(b)], says Paula T. Rogers, an attorney lobbying for SB 111 on behalf of Kutcher. Rogers, who practices with the Devine, Millimet law firm, Concord, N.H., says the provision in question concerns display of business relationships in sales and advertising.
The Kutcher ads included billboards, television commercials, radio spots and print materials for the general public. They advertised EIAs, the firm’s lead product.
The Bureau faulted the ads for not identifying Kutcher’s broker-dealer relationship as stipulated in the RSA provision (mentioned above), says Rogers. The Bureau said such disclosure is required, even when a rep’s ads are for insurance products, she says.
The Bureau did not single out EIAs as reason for the action, Rogers notes. However, in recent testimony regarding SB 111, Mark Connolly, director of the New Hampshire Bureau of Securities, did mention EIAs as an example of the type of product where advertising disclosure problems can occur, say several sources.