A coalition of insurance companies and independent marketing organizations has filed suit in federal court to overturn Rule 151A, a new rule by the Securities and Exchange Commission that classifies indexed annuities as securities. The rule was published in the Federal Register on Jan. 16; the coalition filed the suit the same day.

“The securities laws say explicitly that annuities are to be regulated by the States, not the SEC. Unfortunately, the Commission engaged in a flawed rulemaking process whose result is a rule that conflicts with Congress’s intent and with two Supreme Court decisions,” said Eugene Scalia, the petitioners’ lawyer, in a press statement.

Jim Poolman, spokesperson for the Coalition for Indexed Products, is a former North Dakota Insurance Commissioner. He believes the SEC has decided to regulate indexed annuities at a time when the Commission has other pressing priorities.

“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,” Poolman said in a statement. “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.”

Petitioners in the case include: 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.

A copy of Rule 151A can be found here.