NASD head Glauber is the Master of Double Talk

In a recent speech Glauber made to the NASD Spring Securities Conference in Hollywood, Fla., for some reason he attempted to soften his normal attacks against indexed annuities with some token gestures that his critical comments have “nothing to do with protecting or commandeering turf.” Some of his efforts to not look so territorial included him saying that “We (the NASD) are not proposing any new rule-making or expansion of our jurisdiction.” I only wish I had been able to see video of Mr. Glauber’s face when he spun this BIG one, because the words had hardly left his lips before he went on to say that “If Washington feels there is a void in the way an industry regulates itself, a new government-managed structure is almost certain to emerge.”

This speech reveals much about Mr. Glauber’s intended plan of attack in his attempt to assume control of indexed annuity sales. He is focusing his comments toward bureaucratically minded politicians in Washington for a reason. Indexed annuities are clearly defined as an insurance product and the insurance departments of each state have complete jurisdictional regulation regarding the products, the licensing of agents, and the sales methods approved within their state. We know that this intrusion by Glauber and his cronies from the securities business, who are making very public critical comments about a completely different industry, is all about control of the money. This IS a turf war and what Glauber and the NASD want is to get the billons it has lost to the insurance industry in recent years by the movement of huge amounts of money from brokerage accounts into indexed annuities, back into the hands of its members.

For the NASD to take on one state at a time, however, would be a long and arduous task. But by painting HIS personal concerns about indexed annuities as a national problem, Glauber is lobbying for Washington to do the dirty work of nationalizing control of this facet of the insurance industry and creating a void that would lead to the federal government handing over this new regulatory task to the NASD. There is already a growing debate about forming a national insurance regulatory body for some insurance products. Glauber is simply riding this wave for his own benefit.

From the perspective of the NASD, once this issue is taken from the control of the states and put under federal control, the NASD, as an existing national self-regulatory body, could just step forward and offer to be the saving entity that can solve this manufactured national dilemma about indexed annuities. But Glauber is simultaneously protecting his turf from other possible agencies taking over this task as he further commented that 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.

In a nutshell the tactics Glauber is following to take over control of indexed annuities is to first confuse their identity as insurance products; then criticize their current regulatory structure; followed by alarming the public and thus Washington that there needs to be some uniform national regulation; and finally promoting that a new agency is not necessary since they could just step in and take over the regulation of indexed annuities. And that IS the agenda and ultimate goal of Glauber and the entire securities industry.

Glauber’s Admission of HIS Inability to Understand EIAs Is Telling

Glauber is at it again, warning NASD members about his concerns over the complexity of EIAs. It is amazing how involved this man has become with a product that is completely out of his jurisdiction at the NASD and is fully under the regulatory authority of a nationwide system of state insurance departments. Nevertheless, at the NASD Spring Securities Conference in Hollywood, Fla., Glauber took the opportunity at this public venue, to once again work his propaganda campaign, to muddy the otherwise clear waters about the regulation and function of indexed annuities. He insists that he, and what he calls, “some of the brightest people in (his) industry,” have put EIAs under a microscope but simply cannot understand how they work. This admission of incompetence by Glauber that he and his securities’ industry peers are clueless about understanding insurance products is exactly why they have no business speaking up critically about them.

The important thing Glauber and his buddies need to realize is that unless they personally are planning on purchasing an indexed annuity, there is no reason that ANY of them need to understand them at all. The good news that should reassure Glauber about his voiced concerns is that those in the insurance industry who sell indexed annuities DO understand how they work, and the majority of the buying public that hears about them also understands them and like what they have to offer. In fact, indexed annuities are so popular that non-insurance companies like Charles Schaub are clamoring to get into the action by developing their own indexed annuity products and the public is moving billions of dollars annually from the lack-luster performance of bank CDs and high risk securities into the safety and guaranteed benefits only available in an indexed annuity.

If Only The NASD Was Held To A Legal Standard

The big difference between the lawsuit mentioned in a previous post, and the NASD propaganda campaign against indexed annuities, is that the lawsuit requires that eventually the accusers prove their claims with specific evidence. A lawsuit also allows that the insurance side has the complete opportunity to disprove the false accusations, all in an officially supervised public forum with equal rules applied to both sides. The judicial system is supposed to listen to all evidence without bias and without prejudice, and then rule based upon the factual presentation of each party made in the scheduled sessions. Courts specifically attempt to remove all influence of rumor, gossip, and pubic opinion from judicial decisions. After each side gets their say, there is an official determination by a judge or a jury, and if there have been false accusations and the court finds so, this ruling can set aside those false claims and their negative effects once and for all.

Unfortunately, unlike these ambitious attorneys, by choosing to wage their battle in the media, the NASD has found a gap whereby they are not officially being held accountable for their misinformation and false accusations. They are left unchecked when they overstep their authority and intrude into the insurance industry and make inappropriate criticisms of indexed annuities. Despite the best attempts of the insurance companies, and other annuity friendly voices to clear up these misstatements or correct erroneous information, this kind of propaganda attack being used by the NASD forces annuity proponants, the issuing insurance companies, as well as the state insurance commissioners, into a defensive posture. Years of conditioning has made the public weary of defensive positions and caused them to doubt the sincerity of someone who has to constantly fight to defend their dignity and honor. In spite of our legal precident for innocence UNTIL proven guilty, in the court of public opinion, it seems to always work the other way.

When you have a carefully orchestrated effort, such as being put forth by the NASD to steal all credibity from an entire industry sector, then you have an unfair fight that would probably benefit from the balanced and structured processes of our courts. It brings to question the power and influence we have allowed this "voluntary" self-regulatory organization to acquire, where they can so deliberately attempt such a massive influence campaign against an entire industry to which they have absolutely NO authority. The motives of the NASD are the same greed and personal agenda exhibited by the attorneys who are leading this class action lawsuit against the insurance companies. It is all about the money.

The fight that the insurance companies have with the law firm is a very winable battle because of the fair processes of our courts and the triumph that system can afford truth and justice. But the battle with the NASD will be a fight that will likely never conclude. As long as insurance products, such as indexed annuities are taking such massive amounts of money from the securities industry, this fight will continue.

An interesting "tell" in all of this is the fact that so many broker dealers, like Schaub, are beginning to produce their own indexed annuities. This move could be construed as either a validation by these broker dealesr of the value of this financial product, or it could be that these broker dealers do NOT expect the NASD to ultimately prevail, so they are preparing to become part of this fight for that market share in a different way. This competative approach to fighing the gains of indexed annuities is one that the NASD should notice and encourage from their broker dealers who are whining about lost revenue. And it is this kind of competitive approach that usually leads to more and better product selection for the benefit of the buying public. If the NASD was willing to wage a fair fight, everyone could end up the winners.

Insurance Companies Will Finally Get "Their Day In Court" to Defend the Suitabilty of Annuities--Literally

I was recently forwarded a link to the web site of a law firm who has put together a class action lawsuit against dozens of insurance companies. They are using backdoor claims that seminars sponsored by independent agents, who promote the use of estate planning trusts, were all a conspiracy supported by these insurance companies to abuse and defraud seniors into buying annuities.

But when you read what this firm has posted on their website, you see that this is nothing but another aggressive personal injury law firm’s attempts at getting into the pockets of BIG insurance companies for their own enrichment, not for any moral purpose or for the benefit of the participants. Just like the ambulance chasers who do those dorky advertisements on TV, this firm is trying to make a name, and a lot of money, for themselves by exploiting a popular issue that has a lot of media attention. As attorneys love to do, they can dramatically claim ANYTHING in the lawsuit they want, without having to prove or justify any of it at this point. The more people they can solicit to join this lawsuit only increases the potential amount they can collect for themselves if they are successful in their attempts.

When you see what the thrust of their claims really are, however, you realize that they are based in easily dismissed lies about the practices of insurance companies and the function of annuities. These insurance companies are not going to just lay down and take these false accusations, when defeating them with a good group of defense attorneys would not only save them the expense of an unjust settlement, but it could also prove to provide to the pubic an official validation that shows annuities as being perfectly suitable for seniors. When this case is tried and heard in an unbiased court of law, if it gets that far, the combined resources of all these companies should be able to easily disprove ALL of these false accusations.

The use of seminars to provide general information and bring together prospect and agent is a useful and perfectly appropriate venue that allows interested attendees to learn new information WITHOUT pressure or obligation. Still, if there were any improprieties in the recommendations or sale of trusts, it will be easy to show how those kinds of non-insurance activities by these agents are beyond the control or the responsibility of the named insurance companies. The attorney’s attempts to coin the phrase “Trust Mills” does not change the fact that an agent’s responsibility to the insurance companies to which they are contracted, and visa versa, is limited to the express authorization to sell that company’s products, and nothing further. Since a trust is a legal document, I bet if you looked deeper, the real culprits behind the overzealous use and promotion of trusts are lots of other greedy attorneys.

The final thing here is that these attorneys will have to prove that this group of people was materially hurt in some way, not just dissattisfied with their decisions. Unless the sale of an annuity was done fraudulently, something that no insurance company would condone, and that this action can then be proven to have harmed the purchaser, there is no case. The fact that there are contractual rules and limitations in an annuity contract does not make them an inappropriate product nor does that make the sale of them to willing customers fraudulent or unsuitable. Insurance law requires that all of these contract provisions are properly and fully disclosed LONG before the prospect is “locked” into their contract commitments. Every company mentioned in this suit only has to produce the signed disclosure statements to prove that the prospect was not deceived into anything. Since these attorney’s have chosen to pursue this as a class action suit, I believe it will have to ultimately be proven in court that the entire group has been harmed in the same way for this lawsuit to succeed.