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June 15, 2010 at 08:00 PM
WASHINGTON BUREAU — Supporters of state regulation of equity indexed annuities have renewed efforts to get a provision into H.R. 4173 that would bar the U.S. Securities and Exchange Commission from regulating the product.
Supporters’ efforts surfaced when the Consumer Federation of America, Washington, and Fund Democracy, Oxford, Miss., wrote a letter objecting to the initiative to members of the H.R. 4173 conference committee.
The conference committee began working today on reconciling the House version of the bill and the Senate version.
Committee leaders hope to complete work on the bill in time for President Obama to sign it before July 2, when Congress is set to leave for the Independence Day recess.
In January 2009, the SEC tried to get jurisdiction over EIAs by publishing Rule 151A, a regulation would classify EIAs as securities.
A panel of the U.S. Court of Appeals for the D.C. Circuit ruled in July 2009 that the agency had authority to regulate EIAs, but it blocked the SEC from doing so pending a study by the agency of the potential impact such a rule would have on capital formation and competition.
An issuer of EIAs, Old Mutual Insurance Company, Baltimore, has asked the panel to set aside its decision and bar the SEC from regulating EIAs. A decision on that appeal is pending.
The new conference committee effort follows a May 20 decision, made during debate on H.R. 4173 on the Senate floor, to block a vote on a proposed amendment that would have let state insurance regulators keep oversight over EIAs.
The CFA and Fund Democracy say in their latest letter that, “Exempting equity-indexed annuities from securities regulation would set a dangerous precedent and encourage the development of additional hybrid products designed specifically to evade a more rigorous form of regulation.”
Moreover, the groups say, adding the provision to the final bill despite the fact that the provision is not included in either the House or Senate version of the bill “would be a gross violation of the integrity of the legislative process.”
