The head of the National Association of Securities Dealers Inc. has warned NASD members about his concerns about the complexity of equity-indexed annuities.

Analyzing the suitability of EIA contracts and disclosing EIA risks and costs at the point of sale is “more difficult and labor-intensive” than analyzing and explaining many older, simpler products, NASD Chairman Robert Glauber told NASD members today at the NASD Spring Securities Conference in Hollywood, Fla., according to a written text of the speech.

“Frankly, the challenges of adequately disclosing to a potential customer the material features of an equity-indexed annuity are daunting, to put it mildly,” Glauber said. “Some of the brightest people in this industry have put these things under a microscope and couldn’t make head or tail of them.”

Glauber hastened to add that broker-dealer reps have a right to sell EIAs or other products that NASD officials believe to be complicated.

“You can create almost any kind of product you want and structure it like a Rube Goldberg device,” Glauber said. “But I cannot emphasize strongly enough that your responsibility to ensure that product’s suitability for its intended customers, and to ensure that those customers fully understand the product’s risks as well as its benefits, is absolute and unchanging.”

Glauber repeated previous calls to apply the same consumer protection rules to sales of all types of annuities.

“I want to emphasize that, for NASD, this has nothing to do with protecting or commandeering turf,” Glauber said. “We are not proposing any new rule-making or expansion of our jurisdiction.”

But Glauber said the NASD has to be tough to preserve the current self-regulatory system and ward off the creation of a new federal securities regulatory agency that might be similar to the new public board that now oversees the accounting industry.

“If Washington feels there is a void in the way an industry regulates itself, a new government-managed structure is almost certain to emerge,” Glauber said.