The Securities Industry Takes Its Propaganda Campaign to Washington

The Senate Committee on Aging got an earful from securities industry representatives, as it met on March 29, specifically for the purpose of examining methods con artists use to persuade older Americans to invest in a wide range of fraudulent investments, such as fake promissory notes and fake real estate investments. From this agenda you would think that the securities representatives would have enough concerns about such illegal activities within their own industry and stay on topic. A victim and a convicted con artist, who testified, only talked about schemes that had no relationship to insurance or annuities. But the 3 securities regulators who testified, chose instead, to once again step completely outside their area of jurisdiction, and take this opportunity to continue the misleading statements against indexed annuities we now so quickly recognize as part of their ongoing propaganda campaign, which is meant to eventually wrestle control of indexed annuities from the insurance industry. Patricia Struck, president of the Wisconsin NASAA, Elisse Walter, executive VP for regulatory policy and oversight at the NASD, and Susan Ferris Wyderko, director of the Office of Investor Education and Assistance at the SEC, all chose to devote from 10 – 20% of their written testimony to emphasize the need to keep seniors from buying unsuitable annuities. Besides the same false and misleading statements about the product details we have seen so often from securities regulators, their illegal references to categorize indexed annuities as investments, and the vague generalized statements, they also managed to attack the “free lunch” seminar as a sure way of spotting a con artist who is selling unsuitable annuities to seniors. Ironically, these securities representatives found a way to get it on record that “variable annuities are legitimate and suitable investments,” although they go on to provide their required disclaimer about potential risk and costs. As I read about this hearing, it reminds me of the way Hollywood actors have been brought in to testify about some social issue, not from their overwhelming knowledge or expertise, but simply because one of the character roles they played in a movie portrayed some knowledge about the issue. In the case of this hearing, in their comments about indexed annuities, the three securities reps don’t even have that credential to fall back upon. It is not surprising that the securities industry is taking its propaganda campaign to Washington, where misleading and confusing statements, insinuations, and deception are normal ways of doing business; and where having a strong financial concern about some issue is sufficient to earn an individual or a group, the title of expertise. Even though many of these securities reps’ comments and statements are false and misleading insinuations, in Washington, at least, they simply call that “spin.” And we have come to see how the NASD and others in the securities industry are becoming very skilled at this kind of political “spin.”