Top officials of the National Association of Securities Dealers recently told securities industry executives that laws and regulations ought to put marketers of mutual funds and annuities on a level playing field.
NASD Chairman Robert Glauber and NASD Vice Chairman Mary Schapiro spoke in New York at conferences organized by the Securities Industry Association.
Marketers of products that compete with mutual funds should follow sales and disclosure rules similar to the rules that govern mutual funds, Glauber said at an SIA institutional brokerage conference.
“Investors have a right to expect a level playing field when they’re examining and comparing products that are close substitutes for each other,” Glauber said, according to a written version of his remarks.
Glauber said the NASD needs to start looking at fixed annuities, variable annuities and equity indexed annuities, exchange-traded funds, and some other products, such as separately managed accounts, to ensure that investors are as well-protected from abuses when they buy those products as they are when they buy mutual funds.
The NASD already has proposed a rule establishing specific suitability and supervision requirements for variable annuities, Glauber said.
The NASD also has encouraged sales representatives registered with the NASD to treat equity indexed annuities as if they are securities, even though it is not clear whether EIAs are always securities, he said.
Glauber’s colleague, Schapiro, spoke briefly about marketing of equity indexed annuities during an appearance at a conference on mutual fund industry reform.
“Despite what you may read in the press, our goal is not to extend our jurisdiction to insurance companies,” Schapiro said. “Rather, we simply believe that our members need to be aware of the regulatory and supervisory risks that can arise when their registered representatives sell these products, particularly when they are marketed as securities products and offer substantially greater sales compensation than traditional registered securities.”
NASD chairman says marketers of products that compete with mutual funds should follow sales and disclosure rules similar to the rules that govern mutual funds