Breaking News: Insurance Companies, IMOs, File 151A Suit Against SEC

“It is unfortunate that the SEC seeks to duplicate state efforts to regulate indexed products when at the same time it has come under heavy criticism for failing to adequately meet its core mandate of overseeing the securities industry,” he said.

In adopting the rule, the Commission retreated from initial suggestions that there were significant abuses in the sale of indexed annuities, and said that “the presence or absence of sales practice abuses is irrelevant” to its decision to adopt the rule. The regulation was appropriate, it said, “without regard to whether there is a single documented incident of abuse.”

The Commission conceded that the rule might cost insurance companies $100 million in the first year alone, but declined to give “comprehensive consideration” to whether existing state regulation was sufficient to protect consumers. The National Association of Insurance Commissioners and state insurance legislators opposed the rule.

In a letter to SEC Chairman Christopher Cox, 19 members of Congress warned that the rule would “reduce product availability and consumer choice” and “effectively [place] the cost of the regulation squarely on the shoulders of consumers.”

Poolman added, “It is ironic that indexed annuities have fared so much better during the recent financial crisis than securities products, and yet the SEC now wants to regulate indexed annuities, even though nobody lost a dime on indexed annuities as a result of the market meltdown.”

The petitioners in the case are American Equity Investment Life Insurance Company, BHC Marketing, Midland National Life Insurance Company, National Western Life Insurance Company, OM Financial Life Insurance Company, and Tucker Advisory Group.