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Regulation and Compliance > State Regulation

NAFA speaks out on Dodd-Frank

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NAFA was one of the leading opponents to SEC 151A and has not shied away from taking a strong stance on the Dodd-Frank Act as well. In a release earlier this week, NAFA took advantage of the “request for comments” for Dodd-Frank (the Dodd-Frank Wall Street Reform and Consumer Protection Act) to get some key points across.

According to NAFA President and CEO, Kim O’Brien, one sticking point is “the misapplication of the term ‘swap’ (a.k.a. Security-Based Swap or Security Based Swap Agreement).”

As stated in their paper, “NAFA pointed out the conflict within the proposed rules in which one section excludes insurance and annuity products from federal regulation, but another section considers them ‘swaps’ that are subject to SEC regulation. NAFA emphasized that insurance and annuity products are not subject to SEC regulation and therefore should not be considered ‘swaps,’ and that the language the Commissions are using in their proposed rules does not clearly indicate this exclusion.”

Also, NAFA has concerns “that the SEC wishes to expand its jurisdiction and regulate insurance and annuity products via the proposed rules.” NAFA shot this down as well, pointing out that:

  • Congress rejected the SEC’s position by passing the Harkin Amendment to the Dodd-Frank Act that clarifies which insurance and annuity products should be excluded from federal regulation.
  • That they are not securities under SEC jurisdiction.
  • And that they are left instead to continued state insurance regulation.

In addition, NAFA agreed with the American Council of Life Insurers and the Committee of Annuity Insurers and “encouraged the Commissions to replace their existing language with the language incorporating Section 3(a)(8) of the Securities Act of 1933.”

O’Brien concluded with additional thoughts on the subject:

  • NAFA’s desire is to ensure that retirees and those planning for retirement who choose fixed annuities to provide the guarantees of lifetime income and a savings safety net are not harmed by a misapplication of the term “swap” or the loss of the protections provided by state insurance regulation.
  • It is critical that fixed annuities remain under state insurance regulation and continue to be available through professional and trained insurance representatives and advisors to ensure that Americans may continue to enjoy access to these fundamental and necessary retirement products.


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