SEC official bats for status quo in pre-need industry

A ranking official of the Securities and Exchange Commission (SEC) has come out strongly against any proposed legislative moves to transfer regulatory authority over the pre-need industry to the Insurance Commission (IC).

In a five-page memorandum to SEC Chairman Lilia Bautista that sets out in great detail the case for the retention of the status quo, SEC Commissioner Jesus Enrique Martinez outlined his opposition to the move of some congressmen to implement the transfer.

Argued Martinez: "Pre-need products are not insurance products but securities, and to allow them to be classified otherwise will eventually weaken the SEC’s jurisdiction. The SEC has the experience and historical claim to the improvement of the regulatory functions it has over the pre-need industry.

The stand taken by Martinez is in line with Bautista’s own well voiced opposition to any such move.

Moreover, a World Bank report also emphatically concluded that the pre-need industry should remain within the jurisdiction of the SEC and not the IS. In its own study, the findings of which were released last year, the World Bank concluded that any regulatory change "would stifle innovation and could freeze the industry."

In his memorandum, Martinez said that the pre-need industry has grown at an average of 25 percent per annum over the past 36 years, and that steady and impressive growth should not be put at risk simply over a basic lack of understanding of the industry.

He further added: "The country needs innovative concepts to support domestic capital markets and contribute wealth generation, and the SEC is at the forefront of these efforts."

Martinez also pointed out that the foreign and domestic markets that are instruments in these efforts of the SEC have recognized the pre-need industry "to be of acceptable form under SEC supervision."

In addressing criticism that the pre-industry has been getting away with "unsavory" acts while under SEC supervision, Martinez countered "categorically no."

He explained: "Whatever flaws there may have been in the past have been more the results of the growth push than even the remotest suggestion of an intention to deceive."