WASHINGTON BUREAU — A federal appeals court panel could vacate Rule 151A, a regulation that would let the U.S. Securities and Exchange Commission classify indexed annuities as securities.

A panel of judges at the U.S. Court of Appeals for the D.C. Circuit has raised that possibility in a response to a motion filed by Old Mutual Financial Life Insurance Company, Baltimore, a unit of Old Mutual P.L.C., London.

States now regulate indexed annuities as insurance products.

The SEC has set Rule 151A to take effect for indexed annuities sold on or after Jan. 12, 2011. The SEC then would apply the same rules that it now applies to variable annuities and other securities to indexed annuities.

Insurers filed a suit in January in effort to stop the SEC from implementing the rule

An appeals court panel ruled in July in connection with the case — American Equity Investment Life Insurance Company, et al, vs. the Securities and Exchange Commission, No. 09-1021 — that the SEC had the authority to oversee EIAs as securities, but that the SEC had failed to properly study the effect of Rule 151A on efficiency, competition, and capital formation, and to include that information in the rule.

“Accordingly, we remand the rule for reconsideration,” the panel said in July.

Old Mutual filed a motion of its own asking the appeals court panel to ensure that the insurance industry would have at least 2 years to prepare to comply with Rule 151A.

Instead, the court has ordered additional briefing in the case, not only on the issue of whether implementation of the rule should be delayed beyond Jan. 12, 2011, but also on the issue of whether the court should vacate the rule because of “the SEC’s failure to properly consider the effect of Rule 151A upon efficiency, competition, and capital formation.”

The order gives Old Mutual 10 days to file a brief. The SEC would then have 10 days to respond to the Old Mutual brief.

After being briefed by Old Mutual and the SEC, the court “will then consider whether a stay, vacatur, or another remedy is more appropriate than the remand without vacatur provided in the order issued July 21, 2009,” the court says.

If the order were vacated, and the SEC still wanted to regulate EIAs as annuities, the SEC would have to revise the rule to address the court’s concerns, then go open a new comment period. Once the SEC revised the rule, the annuity industry could go back to court to seek scrutiny of the revised rule.

Eric Marhoun, Old Mutual’s chief legal counsel, has welcomed the new order.

“We are very pleased with the court’s request for further briefing on the proper remedy in this case,” Marhoun says.

The court is “right to consider other options, including the possibility of vacating the rule entirely,” Marhoun says.

The SEC “will be filing in accordance with the court’s order,” an SEC spokesman says.