Dec. 17, 2008 – U.S. Securities and Exchange Commission members today offered their overwhelming support to controversial Rule 151A, a move which will significantly change the way that many of those in the financial services industry make their livings.
During a public session in Washington Wednesday morning, SEC chair Christopher Cox and commissioners Kathleen Casey, Elisse Walter and Luis Aguilar all offered their firm support for the proposal, which would securitize (and require securities licensing for the sales) of certain fixed indexed annuities products.
Both commissioners and staff continued to cite April’s “NBC Dateline” investigation into insurance sales as a touchstone for the ruling, suggesting that advisors use predatory tactics in the sales of annuities.
In a minor consolation to the outpouring of individual and industry reaction to the proposal, Rule 151A will cover products sold after Jan. 12, 2011. Several organizations have already announced their intention to counter the ruling with legal action.
Commissioner Troy Paredes was the sole voice of dissent, telling fellow commissioners he was disappointed the ruling implies the SEC feels state insurance regulators are inadequate to efficiently oversee the issue.
Paredes also says he believes insurance companies, already hard-hit by the recent downturn in the economy, will have to bear the extra costs required in scrutinizing sales of FIA products, stating “some may be forced out of business by costs related to 151A.”