Skip to content

Washington, D.C. – U.S. Senator Mike Enzi, R-Wyo., is pleased by recent actions that will help ensure military personnel and their families are not victims of companies selling unsuitable investment products.

Recently one of the largest companies that sells contractual mutual funds on military bases announced its intention to halt the sale of these products which are similar to mutual funds except that 50 percent of the first year's payments go directly towards the commissions of the salespersons. The average commission on similar securities products is less than six percent per sale in the first year.

The Securities and Exchange Commission along with the NASD, formerly known as the National Association of Securities Dealers, has been investigating abusive sales practices on military bases. One investment company has entered into a settlement agreement with the SEC and NASD and has agreed to pay $12 million to reimburse customers who have paid exorbitant charges for their financial products. The settlement will also help fund financial education programs for military personnel and their families.

"It is good to see that companies are taking steps in the right direction to ensure our military families do not fall victim to being sold inappropriate financial products," said Enzi. "While these recent actions will certainly help to prevent abusive sales practices, we need to do more. This need is one of the reasons I introduced legislation to ensure our military families are financially protected."

Enzi, Chairman of the Senate Securities and Investment Subcommittee, introduced the Military Personnel Financial Services Protection Act, S. 2905, on October 6, 2004. The bill is designed to give unknowing military personnel some defense against the individuals pushing high cost financial products. The House passed its version of Enzi's bill by a vote of 396-2 on Tuesday Oct. 5, but the Senate did not vote on the bill before Congress adjourned for the year. Although action has been taken, Enzi believes his bill is still necessary and anticipates re-introducing it in the 109th Congress.

Enzi's bill would strengthen the hand of insurance and financial regulators to track down and stop abusive sales tactics. It would also require the Department of Defense to keep a list of individuals barred or banned from military bases because of abusive sales tactics. The bill also clarifies the jurisdiction of state insurance regulators on military bases.