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NAFA Says Nix SEC Rule 151A

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The National Association of Fixed Annuities (NAFA) recently took a firm stand against the Security & Exchange Commission’s (SEC) proposed Rule 151A, which would regulate index annuities as securities rather than as insurance products.

NAFA said in a statement issued in July that it “strongly disagrees with the SEC proposal and will pursue all available avenues of recourse,” including taking legal recourse, if required.

If Rule 151A is adopted, insurance agents without securities licenses would not be able to sell index annuities, investment products that combine both fixed income investments and equity index options so as to be able to leverage opportunities in both.

Index annuities–often the subject of bad press–have become a target of civil lawsuits and regulatory action in several states because of the high commissions associated with them and the fact that they have sometimes been sold inappropriately to elderly people.

NAFA said in its statement that it would hire both a public relations firm and an experienced Washington, D.C.-based law firm to propose a “complete withdrawal” of Rule 151A.