The U.S. Securities and Exchange Commission should tread carefully in establishing disclosures for variable annuities at the point of sale, an SEC commissioners said here Tuesday. [@@]

In a speech at the National Association for Variable Annuities 2005 Compliance & Regulatory Affairs Conference, SEC Commissioner Paul Atkins said much of the feedback the commission has received on proposed variable annuity disclosures has criticized the proposal as duplicative and potentially adding to consumer confusion.

“The last thing we want to do is mandate a form that will only add to investor confusion in an area already challenging for them to navigate,” Atkins said.

The SEC proposed its disclosures for variable annuities in February. The board voted to approve disclosures for other financial products, such as mutual funds, at the point of sale in 2004. But Atkins suggested that the point-of-sale disclosure rules for other products may also need to be reworked. In the process of crafting the disclosures, the focus appears to have shifted from listing potential conflicts of interest and some costs to a more complete cost listing, Atkins said.

Although the SEC is considering new disclosure rules, Atkins also urged the commission to act as it wants the markets to act.

The goal of establishing new rules and regulations is to create a sense of discipline within companies under the SEC’s regulatory control, but “we too must be disciplined in bringing enforcement actions,” Atkins said.

Companies operating to the best of their ability within the rules “should not live in fear” of an SEC examination or enforcement action, he said, and the commission “should avoid rulemaking through enforcement.”

When, in the course of an enforcement action, the commission finds that a rule is not effective, or can be improved, it should make those changes through the normal process outside of the enforcement action.

The “failure to provide clear standards” will only hamper the ability of companies to operate in compliance with SEC rules, Atkins said.