The National Association of Securities Dealers is taking a close look at sales practices in the variable annuities business, a senior official said Thursday.

"This is an area of heightened concern for us," because the annuities business, "in addition to being popular, is very complicated," said R. Clark Hooper, the NASD's executive vice president for disclosure and investor protection.

Ms. Hooper spoke to bank compliance officials attending a Bank Securities Association conference here.

Bank brokerages are an important outlet for sales of annuities. The industry's variable annuities sales totaled $3.2 billion in the second quarter, according to Kenneth Kehrer Associates of Princeton, N.J.

Ms. Hooper said the NASD, a self-regulatory organization for broker- dealers, is scrutinizing annuities sales practices of "a number of members."

She said sellers of annuities must make sure their customers understand the distinction between variable annuities and mutual funds.

There are a "lot of little nuances" associated with annuities, including costs and tax implications, that must be explained to the investor, Ms. Hooper said.

She emphasized education as key to averting trouble. "You can adopt all the rules in the world, but education is important."- Niamh Ring

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