Analysis ManEquity objects to the current form of the proposed rule change and strongly urges the Commission to exempt variable insurance products for several crucial reasons. First, the Commission has stated that its primary intent in proposing the rule change is to obligate broker dealers to maintain certain records at the local level in order to provide state securities regulators easier access to such information. ManEquity currently distributes only variable insurance products, therefore the major benefit cited by the Commission would be absent since the majority of states do not define such products as securities pursuant to their statutes. Generally, states regulate such products through their insurance regulatory agencies and not the securities regulatory agency. The electronic age has brought forth many improvements to allow broker dealers and regulators more immediate and efficient access to information.
Many broker dealers store necessary documentation on computer networks via electronic scanning.
This sort of information could be made available to a state regulator very rapidly. The concept of mandating original documentation within each jurisdiction a broker dealer conducts business is both old-fashioned and extremely inefficient. As a subsidiary of a life insurance company and a distributor of variable insurance products, ManEquity is familiar with the filing and examination requirements of state insurance regulators. Although most insurance companies have centralized their administrative, processing and record keeping functions, it is interesting to note that there does not appear to be any complaints by state insurance regulators regarding a lack of information or their inability to gather necessary information. Evidently state insurance regulators are neither deterred by nor suffer from the absence of original documentation in their jurisdictions.