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.
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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.