SEC Adopts Rule 151A
- Thread starter sman
- Start date
- 8,707
They reacted to dishonest insurance agents swindling consumers? Hmmm...I am securities licensed as well and I don't think you have to be a rocket scientist to know that there are dishonest Securities Reps...The big question is does this protect the consumer more less or the same...and I would honestly say it protects less...with all the forms we have to cya us on the Security side I think consumers will be less not more informed but will sign forms stating that they understand this and that and does this mean a 6 page brochure becomes a 100 page prospectus?
- 924
That is exactly what will happen. I have used a prospectus more than one to convince someone to get out of a variable into a fixed product. Consumers never read a prospectus, but we can use them to yellow-highlight the scary, good stuff that is usually found around page 78.
A prospectus is about as much help to the average Joe as the IRS "estimates" of how much time they think you will spend on a particular tax form or the "paperwork reduction act" BS that burns up paper telling you how much paper is being burned up to tell you...
- 2,908
My concern would not be limited just to what the SEC would do to annuities, I would be more concerned about what the B/D's would do to your non-securities business as part of their responsibility to oversee everything in your shop. You have agents, some here as well, who think "oh, well I will just go and get a securities license to sell annuities then I will be all set" and that they will just continue to go on their independent, merry way with their health insurance sales etc. Rude awakening coming there.
I gave up my Series 7 to get those clowns out of the rest of my business. I dont need to have the Compliance Department (also known as the Sales Prevention Department) of a B/D approving my ads and business cards and phone scripts for something they dont even know squat about.
Yes, I understand that there are some B/D's who stay out or some of this. That is only because they are not doing what they are required to do so that is not pretty either and subject to change at any momemt.
Anyone else here feel my pain on this?
- 118
I was afraid you would say that, but it's true. 151A may also make IUL/EIUL life insurance a "security" as well, which would mean goodbye 6 page color brochures and hello 320 page prospectuses made out of recycled paper. I sell alot of EIUL because it's a great product and offers a great alternative to Whole Life. I really would be irritated to fill out a "Suitability" form that states in bold that EIULs are HIGH RISK INVESTMENTS during every single appointment. Why? Because it's RIDICULOUS.
Also, a comment on the FIAs. Though I have a Series 7 and 66, I am still strongly opposed to 151A because of what the SEC will do to these great products. Did you know it costs money - LOTS of money - to register and maintain products as securities? More costs to the insurance companies mean they will pass these expenses off to the agent and consumer in the form of crappier products (ridiculously lower caps, over-complicated prospectuses, intimidating language on RISKS) and also significantly drop agent commissions (to where you can't feed your family anymore selling annuities - you have to sell mutual funds! Oh wait, that's what they're TRYING to do!).
The SEC's actions hurt consumers by giving them watered down, expensive products, it hurts agents by reducing their compensation (thus encouraging more hustling for prospects rather than taking care of the ones they have), and it opens the door to full and complete control/regulation of the insurance business.
The SEC can't even police their own industry in the securities world - how do they think they can police the securities AND insurance biz?
- - - - - - - - - - - - - - - - - -
Big government, more rules, stricter laws, more government agencies to "protect" the American consumer means more oppression and less freedom.
What we need is another Reagan to clip the SEC's wings, fire useless government bureaucrats just there for the paycheck, and dismantle FINRA and leave more regulation authority to the states.
Can you say Bobby Jindal for President 2012?
Last edited:
- 403
It appears EIUL and MVAs are probably securities, but probably not UL, interest-sensitive WL, or non-indexed annuities: http://www.lifeandhealthinsurancenew.../12/22-aalu-ap This seems to leave indexed products issued prior to 2011 in limbo. If post-2010 indexed products are securities, the same product issued in 2009 would seem to be a security. The SEC might leave them alone, but it's unclear whether courts would refuse lawsuits on indexed products issued since 1995.
Last edited:
ChrisMiller
Expert
- 25
Over the last few days I have seen so many different opinions on this ruling. The bottom line is that it doesn't go into effect for 2 years.
So many of you have pointed that out and I agree wholeheartedly that the legal system will do it's job and tie this one up in the court systems until the lawyers have made their money.
Worst thing that could happen...that date (Jan. 2011?) gets pushed back.
Happy holidays to all!
Chris
So many of you have pointed that out and I agree wholeheartedly that the legal system will do it's job and tie this one up in the court systems until the lawyers have made their money.
Worst thing that could happen...that date (Jan. 2011?) gets pushed back.
Happy holidays to all!
Chris
Since the SEC and FINRA have oversight of FIA's or EIA's we are all in good hands now. 
Harry Markopolos - Wikipedia, the free encyclopedia
Harry Markopolos - Wikipedia, the free encyclopedia
From SEC151a.com
"Insurers sue SEC
SEC Adopts Rule 151a
Today (December 17, 2008) the Securities and Exchange Commission (SEC) adopted their proposed rule 151a. The proposal passed by the SEC's board on a vote of 4 in favor and 1 opposed. This rule makes Fixed Indexed Annuities (FIAs) a security in two years. The targeted effective date is January 12, 2011.
IMPORTANT!
THE WORST CASE SCENARIO TODAY IS THAT YOU HAVE TWO FULL YEARS TO COMPLY
If you desire to continue selling FIAs, simply stay right where you are. The fastest this process can happen is 2-years and there are elements already in play that will extend this period in our opinion. The worst thing you can do is run out and take your securities exam and fall into a Broker/Dealers supervision prematurely.
Here's why:
Over the last year, we have participated closely with other concerned insurance professionals and companies to oppose this rule. The leading companies have already formed a Coalition for Indexed Products. The Coalition for Indexed Products is prepared to file legal action to bring this issue before a judge.
Historically, indexed annuities have already been tested in court and the findings have always been that they are NOT a security. We believe this venue will allow the Coalition to succeed and keep our products within the fixed arena. This legal process can take many years to complete.
So, if the insurance companies do not fight back, we have 2 years before we must change. If they do fight through legal channels we will see the window for "business as usual" stay open for a much greater period of time.
Your Next Steps...
dedicated to seeing this issue through to the end and providing independent agents with an accurate voice on this topic. We will let you know of the activities of the Coalition for Indexed Products and we will advise you as to the most profitable way to proceed for your practice.
New products and new opportunities...
One positive aspect of this SEC activity is that insurers have now launched highly innovative traditional fixed annuities that include benefits not available in FIAs! We have been asked by hundreds of agents, "What if I do not want to become securities licensed? Will I be able to make a good living without an FIA to sell?" The answer is YES! We are fully confident that the new traditional products can completely replace the sales opportunities you had with FIAs.
What to aviod...
Don't make any sudden moves!
Stay calm, sit tight and wait for the first steps to take place. The first steps must be taken by the insurance companies, not by the producers. You will be able to make the right moves after they do.We will keep you informed so you can go forward with confidence and solid profits in the future!
Commenting Period Ends
The re-opened commenting period ended November 17, 2008.
Taking the fight to D.C.
Insurance Marketing firms join Indexed Annuity Carriers to fight SEC on Captial Hill in Washington DC.
How can you help?
Washington Trip Update:
September 23, 2008
As American lawmakers wrestled with the largest bailout in US history, a select group of annuity marketing firms and life insurance carriers marched on Capitol Hill to defend the future of an industry. The Security and Exchange Commission (SEC) seeks to make Fixed Indexed Annuities (FIAs) a registered security and therefore, under their supervision.
As the SEC seeks to approve its own proposed rule 151a, this federal agency is reeling from allegations of inadequate oversight within the investment community that is leading lawmakers to consider an overwhelming $700 billion bailout for large Wall Street firms.
The turmoil within the investment community offers an interesting contrast to the safety and security we offer through our Fixed Indexed Annuities. FIAs are competitive savings vehicles that should continue to be regulated as an insurance product, not an investment. If the SEC succeeds in capturing this product, consumers will lose the valuable minimum guarantee protections of the product that make it a fixed savings instrument to begin with. In addition, the consumer will be exposed to a much weaker regulatory support when it comes to conflict resolution.
Under insurance regulation, a state department of insurance can pressure an insurer to refund annuity premiums to a policyholder if the department considers any sale inappropriate. Under the SEC, an unresolved complaint must be decided by a judge or arbitrator. This means the consumer must hire legal representation which adds more cost to the consumer.
Insurance companies point to the recent market turmoil and their consistent stability to demonstrate the value of their conservative approach. Because insurers must maintain required solvency ratios, surplus levels and invest only in the most pristine bond portfolios, insurance companies have remained a foundational block to the US economy for hundreds of years.
Insurers state that during the extraordinary losses witnessed on Wall Street, their annuity owners experienced no loss at all.
The lobbying effort in Washington, DC was organized by a coalition of insurance carriers who offer FIAs to consumers through a large network of independent insurance professionals. Executives from American Equity, Old Mutual, Midland National, and LSW were present to take their message directly to lawmakers. During the one day event, over 110 members of the house and senate were visited. The coalition was aided by Washington, DC law firm, Baker and Hostetler who helped organize the effort.
The day began with a brief meeting to discuss the approach. Baker and Hostetler provided each participant with an information kit and talking points to share with lawmakers. The law firm also reported that approximately 2,500 comments had been posted to the SEC during the short comment period. "Ninety percent of these comments clearly opposed their proposed rule," stated Tom McDonald a partner in the firm
"I was pleased with the receptive attitude lawmakers showed to us during our visit," stated one participant. "They understood what was at stake and could see the value of keeping a viable savings product in the market; one that has proven to protect against loss for over 10 years now. If everything becomes a security, the savers will have no place to go to safely protect the assets they have worked so hard to accumulate over their lifetime."
Unlike other savings products such as certificates of deposit (CDs) or money market accounts, annuities offer additional benefits such as tax-deferred growth and income planning capabilities. Many annuities also provide additional liquidity and enhanced benefits for personal emergencies such as a nursing home confinement.
The attendees feel there is a chance to keep the product out of securities registration. As one stated, "I am confident we can prevail. If our lobbying effort is not successful, the coalition of indexed annuity carriers is prepared to litigate against this predatory rule. Current law, our long history and the principal of consumer protection is all in our favor. I am a firm believer in the independent agent and I am here in DC today to represent their interests."
too long for one post...
"Insurers sue SEC
SEC Adopts Rule 151a
Today (December 17, 2008) the Securities and Exchange Commission (SEC) adopted their proposed rule 151a. The proposal passed by the SEC's board on a vote of 4 in favor and 1 opposed. This rule makes Fixed Indexed Annuities (FIAs) a security in two years. The targeted effective date is January 12, 2011.
IMPORTANT!
THE WORST CASE SCENARIO TODAY IS THAT YOU HAVE TWO FULL YEARS TO COMPLY
If you desire to continue selling FIAs, simply stay right where you are. The fastest this process can happen is 2-years and there are elements already in play that will extend this period in our opinion. The worst thing you can do is run out and take your securities exam and fall into a Broker/Dealers supervision prematurely.
Here's why:
Over the last year, we have participated closely with other concerned insurance professionals and companies to oppose this rule. The leading companies have already formed a Coalition for Indexed Products. The Coalition for Indexed Products is prepared to file legal action to bring this issue before a judge.
Historically, indexed annuities have already been tested in court and the findings have always been that they are NOT a security. We believe this venue will allow the Coalition to succeed and keep our products within the fixed arena. This legal process can take many years to complete.
So, if the insurance companies do not fight back, we have 2 years before we must change. If they do fight through legal channels we will see the window for "business as usual" stay open for a much greater period of time.
Your Next Steps...
dedicated to seeing this issue through to the end and providing independent agents with an accurate voice on this topic. We will let you know of the activities of the Coalition for Indexed Products and we will advise you as to the most profitable way to proceed for your practice.
New products and new opportunities...
One positive aspect of this SEC activity is that insurers have now launched highly innovative traditional fixed annuities that include benefits not available in FIAs! We have been asked by hundreds of agents, "What if I do not want to become securities licensed? Will I be able to make a good living without an FIA to sell?" The answer is YES! We are fully confident that the new traditional products can completely replace the sales opportunities you had with FIAs.
What to aviod...
Don't make any sudden moves!
Stay calm, sit tight and wait for the first steps to take place. The first steps must be taken by the insurance companies, not by the producers. You will be able to make the right moves after they do.We will keep you informed so you can go forward with confidence and solid profits in the future!
Commenting Period Ends
The re-opened commenting period ended November 17, 2008.
Taking the fight to D.C.
Insurance Marketing firms join Indexed Annuity Carriers to fight SEC on Captial Hill in Washington DC.
How can you help?
Washington Trip Update:
September 23, 2008
As American lawmakers wrestled with the largest bailout in US history, a select group of annuity marketing firms and life insurance carriers marched on Capitol Hill to defend the future of an industry. The Security and Exchange Commission (SEC) seeks to make Fixed Indexed Annuities (FIAs) a registered security and therefore, under their supervision.
As the SEC seeks to approve its own proposed rule 151a, this federal agency is reeling from allegations of inadequate oversight within the investment community that is leading lawmakers to consider an overwhelming $700 billion bailout for large Wall Street firms.
The turmoil within the investment community offers an interesting contrast to the safety and security we offer through our Fixed Indexed Annuities. FIAs are competitive savings vehicles that should continue to be regulated as an insurance product, not an investment. If the SEC succeeds in capturing this product, consumers will lose the valuable minimum guarantee protections of the product that make it a fixed savings instrument to begin with. In addition, the consumer will be exposed to a much weaker regulatory support when it comes to conflict resolution.
Under insurance regulation, a state department of insurance can pressure an insurer to refund annuity premiums to a policyholder if the department considers any sale inappropriate. Under the SEC, an unresolved complaint must be decided by a judge or arbitrator. This means the consumer must hire legal representation which adds more cost to the consumer.
Insurance companies point to the recent market turmoil and their consistent stability to demonstrate the value of their conservative approach. Because insurers must maintain required solvency ratios, surplus levels and invest only in the most pristine bond portfolios, insurance companies have remained a foundational block to the US economy for hundreds of years.
Insurers state that during the extraordinary losses witnessed on Wall Street, their annuity owners experienced no loss at all.
The lobbying effort in Washington, DC was organized by a coalition of insurance carriers who offer FIAs to consumers through a large network of independent insurance professionals. Executives from American Equity, Old Mutual, Midland National, and LSW were present to take their message directly to lawmakers. During the one day event, over 110 members of the house and senate were visited. The coalition was aided by Washington, DC law firm, Baker and Hostetler who helped organize the effort.
The day began with a brief meeting to discuss the approach. Baker and Hostetler provided each participant with an information kit and talking points to share with lawmakers. The law firm also reported that approximately 2,500 comments had been posted to the SEC during the short comment period. "Ninety percent of these comments clearly opposed their proposed rule," stated Tom McDonald a partner in the firm
"I was pleased with the receptive attitude lawmakers showed to us during our visit," stated one participant. "They understood what was at stake and could see the value of keeping a viable savings product in the market; one that has proven to protect against loss for over 10 years now. If everything becomes a security, the savers will have no place to go to safely protect the assets they have worked so hard to accumulate over their lifetime."
Unlike other savings products such as certificates of deposit (CDs) or money market accounts, annuities offer additional benefits such as tax-deferred growth and income planning capabilities. Many annuities also provide additional liquidity and enhanced benefits for personal emergencies such as a nursing home confinement.
The attendees feel there is a chance to keep the product out of securities registration. As one stated, "I am confident we can prevail. If our lobbying effort is not successful, the coalition of indexed annuity carriers is prepared to litigate against this predatory rule. Current law, our long history and the principal of consumer protection is all in our favor. I am a firm believer in the independent agent and I am here in DC today to represent their interests."
too long for one post...
Last edited:
The rest of it:
"Top 10 Reasons the SEC is Wrong
Listen to an audio message explaining why now.
What's Happening & What Does It Mean
The Securities and Exchange Commission (SEC) is proposing a rule now known as 151A that if adopted, would make Fixed Indexed Annuities a registered security. Please note: This is only a proposed rule. It has not been adopted and therefore, no action is needed by you at this time. You may continue selling Indexed Annuities without a securities license.
The rule is essentially looking at two tests to evaluate if an Indexed Annuity product would be considered a security.
The first test certainly affects all indexed annuities as amounts payable are calculated in whole or in part by reference to an index.
It is interesting to note that the second test likely affects all annuities because all fixed annuities are designed to exceed the legal guaranteed minimum.
Now here is an important point; to be considered a security under this rule a product must meet both tests.
Again, we want to stress to you that this is a proposed rule at this point, not an adopted rule. Prior to adopting a rule, the SEC will follow their prescribed process.
The entire language of the proposed rule has been released for public comment back to the SEC. The public comment period closes on September 10, 2008. This allows anyone interested to submit their opinions on whether this rule should be adopted or rejected. As you navigate this website, you will see how you can immediately post your comments to the SEC. We have even provided you with suggested language you may find useful in helping you compose your thoughts.
Once the public comment period is closed, the SEC will deliberate over the comments and then vote to adopt or reject the proposed rule. They may also consider modifying or tabling this topic as well.
Should the SEC adopt the rule, immediate compliance is NOT required. There is a 12 month period after the adoption of the rule to allow companies and agents to move toward compliance. In other words, for the 12 months following adoption, agents, agencies and wholesalers may continue to operate as they currently do without violating the rule. So, even if the rule were adopted today for example, you would have 12 months before you would be required to actually execute any changes.
We have received word from several insurance companies that they are prepared to file suit against this proposed rule should the SEC choose to adopt it. Based on past case law and existing safe harbor rules, we believe there is an excellent opportunity to prove that a Fixed Indexed Annuity is NOT a security. So, even if the rule is adopted by the SEC, it could be overturned in a legal proceeding.
You may be wondering how things will change in the event that the rule is adopted and remains in force. Those wishing to stay involved with Indexed Annuity sales would need to become securities licensed at that time. It may also impact certain business models that do not match up well with securities regulations. We will be consulting with the legal experts and industry leaders to keep you apprised of the situation as it progresses as well as identify options you may need to consider in the future. Just visit this site on a regular basis or register and we will notify you when anything changes on this important issue. If you would like to be included in any future communication regarding this mission critical topic, please register today by completing all the information requested on the right side of this web page. Then, click the submit button. We will be updating you each step of the way.
Today, it is business as usual but we must begin to keep a watchful eye on the horizon so that we can restructure where necessary to continue serving every consumer in an honorable and professional manner."
It all comes down to lobbying and there will be more of that under the dems than ever before. BTW, did anyone catch the HBO special to BHO last night? The nuts in Hollywood will be running this country because of the rock star POTUS. HBO and BHO The same three letters...BHO the media creation...HBO the media creation...we are so in trouble as a nation and as an industry.
"Top 10 Reasons the SEC is Wrong
Listen to an audio message explaining why now.
What's Happening & What Does It Mean
The Securities and Exchange Commission (SEC) is proposing a rule now known as 151A that if adopted, would make Fixed Indexed Annuities a registered security. Please note: This is only a proposed rule. It has not been adopted and therefore, no action is needed by you at this time. You may continue selling Indexed Annuities without a securities license.
The rule is essentially looking at two tests to evaluate if an Indexed Annuity product would be considered a security.
- the amounts payable are calculated in whole or in part by reference to a security or a group of securities or an index, and
- the amounts payable by the insurer are more likely than not to exceed the amounts guaranteed under the contract ("more-likely-than-not" test).
The first test certainly affects all indexed annuities as amounts payable are calculated in whole or in part by reference to an index.
It is interesting to note that the second test likely affects all annuities because all fixed annuities are designed to exceed the legal guaranteed minimum.
Now here is an important point; to be considered a security under this rule a product must meet both tests.
Again, we want to stress to you that this is a proposed rule at this point, not an adopted rule. Prior to adopting a rule, the SEC will follow their prescribed process.
The entire language of the proposed rule has been released for public comment back to the SEC. The public comment period closes on September 10, 2008. This allows anyone interested to submit their opinions on whether this rule should be adopted or rejected. As you navigate this website, you will see how you can immediately post your comments to the SEC. We have even provided you with suggested language you may find useful in helping you compose your thoughts.
Once the public comment period is closed, the SEC will deliberate over the comments and then vote to adopt or reject the proposed rule. They may also consider modifying or tabling this topic as well.
Should the SEC adopt the rule, immediate compliance is NOT required. There is a 12 month period after the adoption of the rule to allow companies and agents to move toward compliance. In other words, for the 12 months following adoption, agents, agencies and wholesalers may continue to operate as they currently do without violating the rule. So, even if the rule were adopted today for example, you would have 12 months before you would be required to actually execute any changes.
We have received word from several insurance companies that they are prepared to file suit against this proposed rule should the SEC choose to adopt it. Based on past case law and existing safe harbor rules, we believe there is an excellent opportunity to prove that a Fixed Indexed Annuity is NOT a security. So, even if the rule is adopted by the SEC, it could be overturned in a legal proceeding.
You may be wondering how things will change in the event that the rule is adopted and remains in force. Those wishing to stay involved with Indexed Annuity sales would need to become securities licensed at that time. It may also impact certain business models that do not match up well with securities regulations. We will be consulting with the legal experts and industry leaders to keep you apprised of the situation as it progresses as well as identify options you may need to consider in the future. Just visit this site on a regular basis or register and we will notify you when anything changes on this important issue. If you would like to be included in any future communication regarding this mission critical topic, please register today by completing all the information requested on the right side of this web page. Then, click the submit button. We will be updating you each step of the way.
Today, it is business as usual but we must begin to keep a watchful eye on the horizon so that we can restructure where necessary to continue serving every consumer in an honorable and professional manner."
It all comes down to lobbying and there will be more of that under the dems than ever before. BTW, did anyone catch the HBO special to BHO last night? The nuts in Hollywood will be running this country because of the rock star POTUS. HBO and BHO The same three letters...BHO the media creation...HBO the media creation...we are so in trouble as a nation and as an industry.
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