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Making a final determination on a long anticipated decision on whether equity indexed annuities (EIAs) are insurance products or securities, the SEC voted December 17 to regulate EIAs as securities.

The rule defines the terms “annuity contract” and “optional annuity contract” under the Securities Act of 1933. The rule clarifies the status under the federal securities laws of equity-indexed annuities, the SEC says, under which payments to the purchaser are dependent on the performance of a securities index.

The new definition provides a two-year transition period and applies only to equity-indexed annuities issued on or after January 12, 2011…

Citigroup and Morgan Stanley agreed January 13 to form a joint venture called Morgan Stanley Smith Barney, combining their retail brokerage operations, resulting in a firm that the companies said will be able to count more than 20,000 brokers, $1.7 trillion in client assets, and 6.8 million client households around the world when the deal closes in the third quarter of 2009. Under the terms of the agreement, Citigroup will exchange 100% of its Smith Barney, Smith Barney Australia, and Quilter of the U.K. units for a 49% stake in the joint venture, and an upfront payment of $2.7 billion. Morgan Stanley will exchange 100% of its Global Wealth Management Business for a 51% stake in the joint venture. Morgan Stanley Co-President James Gorman will be chairman of the new joint venture, while Citigroup’s Charles Johnston–who most recently was president of its Global Wealth Management business in the U.S. and Canada–will be president…

On December 31, 2008, LPL Financial made an 8-K filing with the SEC in which it stated its plans to lay off 10 %, or about 275, of its nearly 3,000 employees. The filing said the staff cuts are meant to reduce “its operating costs as part of a comprehensive strategic business review,” and that all employees were notified of the cuts on December 29, 2008. The company will take a fourth-quarter 2008 charge of approximately $12 million due to “severance and similar personnel-related expenses,” and said it expects to “complete all activities associated with the restructuring” by January 31, 2009…

FINRA announced that it has imposed a $1 million fine against E*Trade Securities and E*Trade Clearing for failing to establish and implement anti-money laundering (AML) policies and procedures between January 1, 2003, and May 31, 2007, that could reasonably be expected to detect and cause the reporting of suspicious securities transactions. Furthermore, Web-based firms, like E*Trade, have been instructed by FINRA to “consider conducting computerized surveillance of account activity to detect suspicious transactions and activity.”


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