WASHINGTON BUREAU – Joan Boros, an annuity law expert, says the U.S. Securities and Exchange Commission may still have trouble classifying indexed annuities as securities.
A 3-judge panel at the U.S. Court of Appeals for the D.C. Circuit ruled Tuesday, in American Equity Investment Life Insurance Company et al. vs. SEC, No. 09-1021,that the SEC failed to conduct an adequate of analysis of the effects of the proposed regulation, Rule 151A, on the financial services market.
The panel held, however, that the SEC has the ability to interpret its own regulations, and that it appeared to be making a reasonable interpretation when it decided that annuities with returns linked partly to groups of securities, or to securities indices, are securities and not insurance products.
The National Association of Fixed Annuities, Milwaukee, expressed disappointment about the decision and said it will be focusing on lobbying for bills that would classify indexed annuities as state-regulated insurance products, rather than as SEC-regulated securities.