Securities and Exchange Commission Rule 151A and Annuities: Issues and Legislation
Abstract
In January 2011, a new rule from the Securities and Exchange Commission (SEC), Rule 151A, entitled "Indexed Annuities and Certain Other Insurance Contracts," is slated to go into effect. This rule would effectively reclassify indexed annuities as both security products and insurance products. Since insurance products generally are regulated solely by the states, this rule will expand federal authority over indexed annuities, putting them in a similar classification as variable annuities, which are already regulated by both the SEC and the individual states. The SEC has cited as a primary reason for increased federal oversight numerous problems with improper marketing and sales of these annuity products. This proposal has been controversial, with nearly 5,000 comments received by the SEC. The SEC's final rule was adopted on December 17, 2008, and was published in the Federal Register on January 16, 2009. While some changes were made from the initial proposed rule, the final rule retained the majority of the original language. The U.S. Court of Appeals recently considered a legal challenge to the SEC's rule, in American Equity Investment Life Insurance Co. vs. SEC. The court found that the SEC was not unreasonable in classifying indexed annuities as securities, but remanded the rule to the SEC for the SEC to provide a more thorough analysis of the effects of the rule upon competition, efficiency, and capital formation.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 01, 2010
- Accession Number
- ADA530625
Entities
People
- Baird Webel
- Rena S. Miller
Organizations
- Library of Congress