Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Regulation and Compliance > Federal Regulation > SEC

ACLI Pans SEC Variable Product Proposal

By Steven Brostoff

X
Your article was successfully shared with the contacts you provided.

NU Online News Service, Feb. 9, 2004, 3:43 p.m. EST, Washington – Life insurers are challenging a U.S. Securities and Exchange Commission variable product disclosure proposal.[@@]

The SEC proposal would require variable product separate accounts to publicly disclose details of tools used to prevent market timing abuses.

In a letter to the SEC, Carl Wilkerson, vice president and chief counsel with the American Council of Life Insurers, Washington, says the SEC’s proposal exposes the separate accounts to possible litigation.

“This type of disclosure unnecessarily invites opportunistic litigation that second-guesses business judgment and management decisions,” Wilkerson writes.

The SEC proposal calls for separate accounts to disclose, with specificity, any policies and procedures for deterring frequent purchases and redemptions, as well as arrangements to permit frequent purchases and redemptions.

Separate accounts would have to indicate whether any restrictions apply uniformly in all cases and whether the restrictions will not be imposed in certain cases, and they would have to describe such circumstances with specificity.

Wilkerson says that while ACLI supports SEC actions to prevent illegal excessive trading, the detailed specificity required by the proposal could be counterproductive.

“Explicit disclosure of the registrant’s game plan gives an unwitting roadmap to market timers planning manipulation,” he says.

Wilkerson adds that the proposal would require frequent prospectus updates to fully disclose tools developed to address evolving market timing techniques.

“This,” he says, “will retard quick action to new situations.”

In effect, Wilkerson says, the proposal does more than simply require disclosure enhancements. It may constitute regulation by disclosure, since it requires accounts to give explicit details of procedures to prevent and detect market timing, he says.

Wilkerson says the proposal should be amended by removing the requirement for specific, detailed disclosure.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.