Lawmakers to Exempt Fixed-Indexed Annuities from SEC Oversight
June 28, 2010 by Sarah N. Lynch
By Sarah N. Lynch, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- In a blow to the Securities and Exchange Commission, House and Senate negotiators on Thursday agreed to include language in the financial overhaul bill that would exempt fixed index annuities from SEC oversight.
In a vote of 12-4, House Financial Services members working on the “conference committee” to reconcile differing versions of the financial bill agreed to accept a proposal by Sen. Tom Harkin (D., Iowa) to ensure the products would be treated as insurance and therefore regulated by the states.
If the provision becomes law, it will kill the SEC’s past efforts to regulate indexed annuities as securities.
The SEC under former Chairman Chris Cox previously approved a rule to regulate them, but the U.S. Court of Appeals in the District of Columbia ruled last year the SEC had to reconsider it.
The rule had been challenged in court by a coalition of insurance companies and marketing groups–the primary sellers of indexed annuities.
Indexed annuities, first introduced in 1995, are regulated by states as insurance products. They offer a guaranteed minimum value, but unlike traditional annuities, they also offer an additional return tied to the performance of a stock index.
House and Senate negotiators are hoping to wrap up their work on reconciling the two financial bills sometime on Thursday.
-By Sarah N. Lynch, Dow Jones Newswires; 202-862-6634; sarah.lynch@ dowjones.com