The equity index annuity industry is asking a Washington-based federal appeals court for expedited review of the U.S. Securities and Exchange Commission decision subjecting some EIAs to federal oversight.
The petitioners, led by American Equity Life Insurance Company, West Des Moines, Iowa, a unit of American Equity Investment Life Holding Company, filed the motion asking for the review Tuesday with the U.S. Court of Appeals for the D.C. Circuit.
The petitioners are asking the court to decide on their request by Feb. 10.
The petitioners would like the court to hear oral arguments by June and issue a decision later this year.
A team of lawyers led by Eugene Scalia submitted the brief. Scalia is a partner at Gibson, Dunn & Crutcher L.L.P., Washington.
The petitioners state in the brief that the SEC supports the request for expedited review but would leave it to the court when to issue a final ruling.
The petitioners say they are seeking expedited review because they believe they will succeed on the merits.
“Irreparable harm will occur without expedited review,” the petitioners say.
The final rule they are contesting was published by the SEC Jan. 16. It is scheduled to take effect Jan. 12, 2011.
The SEC says EIAs covered by the rule can be sold under current state-based regulation until the new rule takes effect.
The petitioners say in the brief that they believe they will prevail because the new SEC rule “squarely conflicts with two Supreme Court decisions on which it purportedly was based.”
The delay in implementation of the rule is meaningless, because the rule “effectively outlaws the prevailing method” of distributing the product, requiring insurance companies “to establish an array of new relationships and systems,” the petitioners say.
The petitioners note that the SEC estimates the first-year costs of complying with the rule “to be at least $100 million,” that “most or all” of these costs will be incurred before the 2011 effective date, and that “the costs will not be recouped even if petitioners succeed in this litigation.”
The petitioners say that the affected EIA products are distributed through unrelated companies called independent marketing organizations, and that, for insurance companies, shifting toward the use of broker-dealers that will be required by the new rule “will require a series of steps that must be initiated almost immediately for the companies to be competitive upon the effective of the rule.”
The petitioners say the SEC “disagrees with the petitioners’ view of the merits and allegations of irreparable harm, but agrees that expedited review will further the public interest by promptly bring the certainty to the law that was a principle reason for adopting the rule.”