More On Legal & Compliancefrom The Advisor's Professional Library
- Updating Form ADV and Form U4 When it comes to disclosure on Form ADV, RIAs should assume information would be material to investors. When in doubt, RIAs should disclose information rather than arguing later with securities regulators that it was not material.
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
The Securities and Exchange Commission (SEC) on December 8 agreed to a two-year delay of the effective date of Rule 151A, which would require that equity indexed annuities be regulated as securities.
The SEC consented to a two-year stay of the rule in its brief, which the Commission filed at the U.S. Court of Appeals for the D.C. Circuit in response to a November court order directing the parties in the case to submit additional briefs addressing whether implementation of Rule 151A should be delayed beyond the January 2011 effective date because of "the SEC's failure to consider the rule's effect upon efficiency, competition, and capital formation."
Frederick Bellamy, a partner at the law firm Sutherland in Washington, says that the SEC's brief states that the staff intends to complete its study of state insurance regulation and present its recommendations to the SEC in the Spring of 2010. Then if the SEC agrees with the staff's recommendations, it will seek issue a formal release asking for comments on the Section 2(b) analysis.
Sutherland says in its Legal Alert describing the supplemental briefs in the case, that now that all of the supplemental briefs have been received, the court is expected to issue an order "in the near future as to whether it will alter the relief previously ordered," that is, the court could agree to the SEC's two-year stay, or not. "Right now it's not 100% clear how this will play out," says Mary Jane Wilson-Bilick, a partner at Sutherland and a member of the firm's Financial Services Practices Group. More clarity, in the form of a court order, may come in the next couple weeks, she says.
Sutherland notes in its Legal Alert that Rule 151A would "require registration of virtually all indexed annuities."