Good News! On Monday, July 12, the United States Court of Appeals for the District of Columbia completely vacated 151A.
August 3, 2010 by Sharon Chace
Sharon A. Chace & Stephen P. Howard
So, what does this mean? It means that the court effectively settled 151A. As far as the judicial branch is concerned, there is not sufficient evidence to suggest that indexed annuities should be regulated as securities. The court also reissued the entire ruling with the new language.
Here is language from the court’s order: “Having determined that the SEC’s Section 2(b) analysis is lacking, we grant the petitions insofar as they assert the SEC failed properly to consider the effect of the rule upon efficiency, competition, and capital formation…We therefore order that Rule 151A be vacated.”
Is the securities status of indexed annuities settled for good? According to Sheryl Moore, Advantage Group Associates, Inc., “No. Remember, the Securities and Exchange Commission first questioned the securities status of indexed annuities in 1997. They did so again in June of 2008 with their proposed rule 151A. If we want to ensure that indexed annuities will be regulated as fixed insurance products indefinitely, we need to continue our current legislative strategy.”
NAFA is indicating that if the Harkin Amendment passes (which it looks like it will), the law will legislate out the existence of 151A (meaning that the SEC will not have the power to pass regulations deeming FIAs as securities). [SAC]