A federal court has told the U.S. Securities and Exchange Commission to reconsider its controversial Rule 151A, saying that while it supported federal oversight of the products over confusing state laws, the agency did not conduct a full evaluation as required by law.
Rule 151A requires that classified indexed annuities be regulated like other securities products; it was scheduled to apply to all indexed annuities issued after July 11, 2011.
The U.S. Court of Appeals for the D.C. Circuit said in its ruling Tuesday (July 21) that the SEC “failed to properly consider the effect of the rule upon efficiency, competition and capital formation,” according to several published reports.
The three-judge panel ordered the SEC to reconsider the rule.
Rule 151A was disputed within the financial service industry after the SEC suggested that federal oversight of indexed annuities was needed to ensure proper handling of these financial instruments, often sold to elderly investors who don’t realize that the long accumulation periods might mean their maturity can come at the buyer’s death.
The court noted that the full impact of Rule 151A had not been addressed fully by the SEC.
“After a more thorough review of the existing state law regime, the Commission may decide ultimately that Rule 151A will promote competition, efficiency, and capital formation,” the court stated.
Court: SEC needs to reconsider Rule 151A on indexed annuities via IFAwebnews.com .
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