ACLI Challenges SEC Proposal On Separate Account Disclosure

Separate accounts would have to indicate whether any restriction applies uniformly in all cases, whether it will not be imposed in certain cases and to describe such circumstances with specificity.

Wilkerson says that while the ACLI supports the SECs actions to prevent illegal excessive trading, the detailed specificity in the proposal could be counterproductive.

"Explicit disclosure of the registrants game plan gives an unwitting roadmap to market timers planning manipulation," he says.

Wilkerson adds that the proposal would require frequent prospectus updates to fully disclose tools developed to address evolving market timing techniques.

"This," Wilkerson says, "will retard quick action to new situations."

In effect, he continues, the proposal is more than simply disclosure enhancements. It may constitute regulation by disclosure, since it requires explicit details of procedures to prevent and detect market timing, he says.

Wilkerson says the proposal should be amended by removing the requirement for specific, detailed disclosure.

Reproduced from National Underwriter Life & Health/Financial Services Edition, February 13, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.