On Tuesday the U.S. Court of Appeals for the Washington D.C. Circuit ordered the Securities and Exchange Commission to reconsider Rule 151A, which deems annuities linked to equity indexes to be securities subject to registration with the SEC.
The three-judge federal appeals panel held that the SEC “failed to properly consider the effect of the rule upon efficiency, competition and capital formation.”
“We hold that the Commission’s consideration of the effect of Rule 151A on efficiency, competition, and capital formation was arbitrary and capricious,” Chief Judge David Sentelle writes in an opinion for the court. “The SEC purports to have analyzed the effect of the rule on competition, but does not disclose a reasoned basis for its conclusion that Rule 151A would increase competition.”