| Barry Goldsmith |
The NASD is looking for firms that prod elderly and other investors to switch from variable to equity-indexed annuities, said Barry Goldsmith, NASD executive v.p. of enforcement. “We have seen this type of activity with a couple firms,” Goldsmith told delegates Wednesday at a LegalWorks-sponsored compliance forum in New York. He would not say which firms had caught the NASD’s attention. “It is not a suitable recommendation to sell EIAs [equity-indexed annuities] to older investors. Firms that are not supervising this kind of activity will be subject to enforcement action.” High broker commissions and monetary penalties for pulling out of the investment early are why equity-indexed annuities are a poor investment for investors approaching retirement, Goldsmith told CR. “For an older investor who has need for liquidity, these are not suitable investments,” he said.
Separately, the NASD announced Wednesday that Goldsmith is stepping down after 10 years as enforcement head to become a partner in the law firm Gibson, Dunn & Crutcher‘s Washington, D.C., office. Senior V.P. and Deputy Head of Enforcement James Shorris has been named acting head of enforcement.