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Most likely the insurance industry will sue and stay the implementation of this law. Then it'll rot in court for a few years.
SEC Adopts Rule 151A
- Thread starter sman
- Start date
Insurers sue SEC!
Top 10 Reasons the SEC is Wrong. Here is the web site:
SEC151a.com - Proposed SEC Rule 151a News & Information
Top 10 Reasons the SEC is Wrong. Here is the web site:
SEC151a.com - Proposed SEC Rule 151a News & Information
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Whether you like this change or not (and I know a lot of people who really like this change), the chances of it not happening is probably less than 10% in todays environment.
You don't have to look far to find a line of people who will say their 'equity indexed annuity' was misrepresented when sold (doesn't mean it was, but people will make this claim). Given the new world of regulation we enter tomorrow, unless someone is bribing the right people in a big way, this will happen in January 2011, on schedule.
At least, that is my opinion. I know people who are close to this get polarized in their views, but when you step back a bit, the path is to more regulation, not less. The path is to uniform federal regulation, not state regulation. All this means, the path is to the SEC having control of EIA's.
The next path is for insurance companies to change the name so they are not equity indexed.
Dan
You don't have to look far to find a line of people who will say their 'equity indexed annuity' was misrepresented when sold (doesn't mean it was, but people will make this claim). Given the new world of regulation we enter tomorrow, unless someone is bribing the right people in a big way, this will happen in January 2011, on schedule.
At least, that is my opinion. I know people who are close to this get polarized in their views, but when you step back a bit, the path is to more regulation, not less. The path is to uniform federal regulation, not state regulation. All this means, the path is to the SEC having control of EIA's.
The next path is for insurance companies to change the name so they are not equity indexed.
Dan
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The reality of the legal system is this: the plaintiffs will have to be granted an injunction long before 151A goes into effect in order to stop the 2011 implementation.
To obtain an injunction, certain things will have to be proven. Injunctions, especially against government agencies, are not easy to get. In fact, they are extremely hard.
So, assuming an injunction is not granted, 151A would actually go into effect while the litigation goes on. Once that happens and the rule is in effect for a time before a trial happens, the inclination with judges is to say the issue is moot since the rule is already in effect.
Screw job, but that is the system. It is not at all likely that the suit will delay anything.
To obtain an injunction, certain things will have to be proven. Injunctions, especially against government agencies, are not easy to get. In fact, they are extremely hard.
So, assuming an injunction is not granted, 151A would actually go into effect while the litigation goes on. Once that happens and the rule is in effect for a time before a trial happens, the inclination with judges is to say the issue is moot since the rule is already in effect.
Screw job, but that is the system. It is not at all likely that the suit will delay anything.
I would have to agree with this...I have sold some annuities in the past and the average client was not that savvy on the product.
More regulation is what we are moving toward not less...I was recently at a seminar presented by BCBS MI. Where they had a panel of people including NAHU state rep that had just come back from meetings in Washington and they there was a lot of uncertainty about how this new administration will proceed.
I have been working mostly the senior market because of the GM retiree changeover and selling MA's and LTC through BCBS...just in talking to that group they are pretty ill informed in general about insurance products.
AARP has done a number on a lot of them in leaning more on the government. Figures since they came out of the FDR era.
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Here is the first of many I am sure....
[FONT=Arial,Arial]– A coalition of insurance companies and independent marketing organizations has filed suit in federal court to overturn Rule 151A, the newly published rule by the Securities and Exchange Commission that classifies indexed annuities as securities. The suit was filed in the U.S. Court of Appeals for the District of Columbia Circuit, the court that typically hears cases about new agency regulations. It is the court that invalidated the SEC's hedge fund registration rule and twice rejected the Commission's mutual fund governance rule. The petitioners are represented by Eugene Scalia of Gibson Dunn & Crutcher LLP, which handled the mutual fund governance litigation against the SEC.
Indexed annuities are annuities that offer minimum guaranteed values and credit interest based on the performance of a market index such as the S&P 500. Because the purchaser is guaranteed the return of his or her principal with interest, subject to any surrender charges, indexed annuities are considered safer than securities products, which expose principal to market fluctuations.
Rule 151A was published in the Federal Register on January 16, 2009 and suit was filed the same day.
The petitioners' lawyer, Eugene Scalia, commented: "The securities laws say explicitly that annuities are to be regulated by the States, not the SEC. Unfortunately, the Commission engaged in a flawed rulemaking process whose result is a rule that conflicts with Congress's intent and with two Supreme Court decisions."
Jim Poolman, spokesperson for the Coalition for Indexed Products and former North Dakota Insurance Commissioner, noted that the SEC has decided to regulate indexed annuities at a time when the Commission has other pressing priorities. "It is unfortunate that the SEC seeks to duplicate state efforts to regulate indexed products when at the same time it has come under heavy criticism for failing to adequately meet its core mandate of overseeing the securities industry," he said.
In adopting the rule, the Commission retreated from initial suggestions that there were significant abuses in the sale of indexed annuities, and said that "the presence or absence of sales practice abuses is irrelevant" to its decision to adopt the rule. The regulation was appropriate, it said, "without regard to whether there is a single documented incident of abuse." The Commission conceded that the rule might cost insurance companies $100 million in the first year alone, but declined to give "comprehensive consideration" to whether existing state regulation was sufficient to protect consumers. The National
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[FONT=Arial,Arial] Association of Insurance Commissioners and state insurance legislators opposed the rule.
In a letter to SEC Chairman Chris Cox, 19 members of Congress warned that the rule would "reduce product availability and consumer choice" and "effectively [place] the cost of the regulation squarely on the shoulders of consumers." Coalition spokesman Jim Poolman added: "It is ironic that indexed annuities have fared so much better during the recent financial crisis than securities products, and yet the SEC now wants to regulate indexed annuities, even though nobody lost a dime on indexed annuities as a result of the market meltdown."
The petitioners in the case are: American Equity Investment Life Insurance Company, BHC Marketing, Midland National Life Insurance Company, National Western Life Insurance Company, OM Financial Life Insurance Company, and Tucker Advisory Group.
A Press Kit providing background on fixed indexed annuities and this litigation is attached for reference.
Contact at American Equity Investment Life Holding Company:
Wendy L. Carlson, 515-457-1824
CEO and President
Debra J. Richardson 515-273-3551
Chief Administrative Officer and Executive Vice President
Julie L. LaFollette, 515-273-3602
Director of Investor Relations
[/FONT]
Lawsuit Filed Against SEC Over New Annuities Regulation
WASHINGTON, DC, January 16, 2009 [FONT=Arial,Arial]– A coalition of insurance companies and independent marketing organizations has filed suit in federal court to overturn Rule 151A, the newly published rule by the Securities and Exchange Commission that classifies indexed annuities as securities. The suit was filed in the U.S. Court of Appeals for the District of Columbia Circuit, the court that typically hears cases about new agency regulations. It is the court that invalidated the SEC's hedge fund registration rule and twice rejected the Commission's mutual fund governance rule. The petitioners are represented by Eugene Scalia of Gibson Dunn & Crutcher LLP, which handled the mutual fund governance litigation against the SEC.
Indexed annuities are annuities that offer minimum guaranteed values and credit interest based on the performance of a market index such as the S&P 500. Because the purchaser is guaranteed the return of his or her principal with interest, subject to any surrender charges, indexed annuities are considered safer than securities products, which expose principal to market fluctuations.
Rule 151A was published in the Federal Register on January 16, 2009 and suit was filed the same day.
The petitioners' lawyer, Eugene Scalia, commented: "The securities laws say explicitly that annuities are to be regulated by the States, not the SEC. Unfortunately, the Commission engaged in a flawed rulemaking process whose result is a rule that conflicts with Congress's intent and with two Supreme Court decisions."
Jim Poolman, spokesperson for the Coalition for Indexed Products and former North Dakota Insurance Commissioner, noted that the SEC has decided to regulate indexed annuities at a time when the Commission has other pressing priorities. "It is unfortunate that the SEC seeks to duplicate state efforts to regulate indexed products when at the same time it has come under heavy criticism for failing to adequately meet its core mandate of overseeing the securities industry," he said.
In adopting the rule, the Commission retreated from initial suggestions that there were significant abuses in the sale of indexed annuities, and said that "the presence or absence of sales practice abuses is irrelevant" to its decision to adopt the rule. The regulation was appropriate, it said, "without regard to whether there is a single documented incident of abuse." The Commission conceded that the rule might cost insurance companies $100 million in the first year alone, but declined to give "comprehensive consideration" to whether existing state regulation was sufficient to protect consumers. The National
[/FONT] 1
[FONT=Arial,Arial] Association of Insurance Commissioners and state insurance legislators opposed the rule.
In a letter to SEC Chairman Chris Cox, 19 members of Congress warned that the rule would "reduce product availability and consumer choice" and "effectively [place] the cost of the regulation squarely on the shoulders of consumers." Coalition spokesman Jim Poolman added: "It is ironic that indexed annuities have fared so much better during the recent financial crisis than securities products, and yet the SEC now wants to regulate indexed annuities, even though nobody lost a dime on indexed annuities as a result of the market meltdown."
The petitioners in the case are: American Equity Investment Life Insurance Company, BHC Marketing, Midland National Life Insurance Company, National Western Life Insurance Company, OM Financial Life Insurance Company, and Tucker Advisory Group.
A Press Kit providing background on fixed indexed annuities and this litigation is attached for reference.
Contact at American Equity Investment Life Holding Company:
Wendy L. Carlson, 515-457-1824
CEO and President
Debra J. Richardson 515-273-3551
Chief Administrative Officer and Executive Vice President
Julie L. LaFollette, 515-273-3602
Director of Investor Relations
[/FONT]
Mary Schapiro's Securities and Exchange Commission Seeks to Extend Control Over Fixed Indexed Annuities - WSJ.com
I love the Wall Street Journal!
I love the Wall Street Journal!
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Good article; thanks for sharing.
A bit about FINRA and the SEC.
Obama?s Market Cop Pulled Shades on Sketchy Deal: Susan Antilla - Bloomberg.com
Obama?s Market Cop Pulled Shades on Sketchy Deal: Susan Antilla - Bloomberg.com
I got an email with this link today, it says Congressman Meeks has given NAFA a draft bill to nullify 151A:
NAFA 151A Grassroots Site
NAFA 151A Grassroots Site
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