PURPOSE: This rule implements the requirements of section 375.141.1(8), RSMo, with respect to the demonstration of incompetence, untrustworthiness or financial irresponsibility of producers in the offer, sale or exchange of variable life and variable annuity products.

1. (1) Grounds for the discipline or disqualification of producers shall include, in addition to other grounds specified in section 375.141, RSMo, failure to comply with or violation of the following professional standards of conduct:

   1. (A) In recommending to an individual customer the purchase, sale or exchange of any variable life or variable annuity product, a producer shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other investment holdings and as to his financial situation and needs.

   2. (B) Prior to the execution of a variable life or variable annuity transaction recommended to an individual customer a producer shall make reasonable efforts to obtain information concerning—

      1. 1. The customer’s financial status;
      2. 2. The customer’s tax status;
      3. 3. The customer’s insurance and invest-

ment objectives;

1. 4. The customer’s current and reason-

ably anticipated needs for liquidity; and

1. 5. Such other information used or con-

sidered to be reasonable by such producer in making recommendations to the customer.

1. (C) No person shall materially aid any other person in any violation or failure to comply with any standard set forth in this rule.

1. (2) Interpretation of this rule shall be guided by judicial and administrative opinions and decisions construing substantially similar requirements of the National Association of Securities Dealers (NASD).

AUTHORITY: sections 374.040, 374.045, 375.013, and 376.309.6 RSMo 2000.* Original rule filed July 5, 2005, effective Jan. 30, 2006.

*Original authority: 374.040, RSMo 1939, amended 1967; 374.045, RSMo 1967, amended 1993, 1995; 375.013, RSMo 1973, amended 1995; and 376.309, RSMo 1963, amended 1969, 1983, 1992, 1993. 20 CSR 700-1