The Securities and Exchange Commission has released a final version of its Rule 151A, which will take effect on January 12, 2011.

The rule will regard equity indexed annuities (EIAs) as securities and require firms that distribute the offerings to register with FINRA and operate under its jurisdiction.

The final version details specific changes, in addition to the SEC’s reasoning for implementation, an excerpt of which is found here:

“The status of indexed annuities under the federal securities laws has been uncertain since their introduction in the mid-1990s. Under existing precedents, the status of each indexed annuity is determined based on a facts and circumstances analysis of factors that have been articulated by the U.S. Supreme Court. Insurers have typically marketed and sold indexed annuities without registering the contracts under the federal securities laws … As sales have grown in more recent years, these products have affected larger and larger numbers of purchasers. They have also become an increasingly important business line for some insurers. The growth in sales of indexed annuities has, unfortunately, been accompanied by complaints of abusive sales practices … We believe our action is consistent with Congressional intent in that the definition will afford the disclosure, antifraud, and sales practice protections of the federal securities laws to purchasers of indexed annuities who are more likely than not to receive payments that vary in accordance with the performance of a security.”

A PDF copy of Rule 151A can be found here.