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February 23, 2009 at 07:00 PM
A federal appeals court in Washington will hear oral arguments May 8 on a suit challenging the U.S. Securities and Exchange Commission’s move to adopt Rule 151A, a regulation that classifies some indexed annuities as securities.
The SEC is calling the annuities “equity indexed annuities.”
The lawyers for the petitioners that filed the suit, American Equity Investment Life Insurance Company, et al, vs. SEC, Number. 09-1021, are calling the products “fixed indexed annuities,” or FIAs.
The petitioners filed their first brief in the case Tuesday, telling the court that, under the plain meaning of a provision of the Securities Exchange Act of 1933, fixed indexed annuities are exempt from SEC regulation.
The court has permitted the National Association of Insurance Commissioners, Kansas City, Mo., to join the case as a petitioner, and the NAIC also has filed a brief.
The National Conference of Insurance Legislators, Troy, N.Y., which initially had joined with the NAIC as a petitioner, says it will not try to be a petitioner and instead will submit a friend-of-the-court brief.
“It is really a legal matter involving where NCOIL fits in,” says Susan Nolan, executive director of NCOIL.
“Our objective is to support the NAIC and oppose the SEC regulation, but our attorneys advised us to do an amicus brief, which is consistent with what NCOIL has done in previous cases,” Nolan says.
NCOIL will file a supporting brief, rather than serving as a petitioner, because of a “technical legal issue involving standing,” Nolan says.
The main brief for the petitioners was submitted by Eugene Scalia, of Gibson, Dunn & Crutcher L.L.P., Washington.
“It was only through an analysis that defies Supreme Court precedent, common parlance, and prior pronouncements of the SEC itself that the agency was able to arrogate to itself the power to regulate” fixed indexed annuities as securities, the petitioners write in their brief.
