Regulation of Equity Indexed Annuities

According to a recent Wall Street Journal article, a court order has scuttled a rule to regulate equity-indexed annuities as securities and that the financial-overhaul bill leaves their regulation under state insurance commissioners.

As many eyes were glued to the financial-overhaul bill as it threaded its way to a Senate vote, the U.S. Court of Appeals for the District of Columbia on Monday of last week ordered a Securities and Exchange Commission rule to regulate equity-indexed annuities as securities to be vacated. The ruling was seen as a victory for a coalition of annuity issuers and some state insurance commissioners, which had battled the rule.

In addition, the sweeping financial-overhaul bill, approved by the Senate on Thursday, includes an amendment that would ensure that indexed annuities remain under the regulation of state insurance departments.

Some advisers say that means inappropriate sales of the products will continue.
Indexed annuities are tied to the performance of stock indexes, but typically are sold by insurance agents. The products sometimes carry high commissions, and agents have been criticized for inappropriate sales of the annuities, particularly to the elderly.
They are currently subject to state regulation as insurance products. However, under the new SEC rule, which was passed in December 2008, indexed annuities issued on or after Jan. 12, 2011, would have been registered with the commission and sold by registered broker-dealers.

The Financial Planning Coalition, a group of financial-planner organizations, said in a statement Thursday it was disappointed the SEC was stripped of its authority to regulate equity-indexed annuities. That reduces investor protection by preventing the SEC from preventing abusive sales practices, it said.

The White Law Group is currently investigating the sales practices of broker-dealers that sell equity indexed annuities. If you have any information that may assist The White Law Group in its investigation into the sales practices of firms marketing and selling equity indexed annuities, please contact our Chicago, Illinois office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions. The firm primarily handles these cases on a contingency fee. For more information on The White Law Group, please visit our website at https://whitesecuritieslaw.com.