In a statement dated Jan. 10, the Illinois Securities Department clarified that fixed indexed annuities (FIAs) and the agents who sell such products are not subject to securities registration under Illinois law.
The letter was in response to an action the state initiated against Senior Financial Strategies, Inc., dba Pinnacle Investment Advisors, back in 2008. The owners of Senior Financial Strategies, Susan and Thomas Cooper, were subsequently fined $10,000 for allegedly violating Illinois securities law by advising clients to liquidate annuities or IRAs to fund the purchase of FIAs.
That action, according to the National Association of Fixed Annuities (NAFA) “implied indexed annuities might be considered ‘investment plans’ subject to state securities laws.”
NAFA had worked with Fidelity & Guaranty Life Insurance Co. on the issue and filed an amicus brief in court to clarify the order and started a dialogue with the Illinois Securities Department. In 2010, the fixed indexed annuity industry was able defeat the SEC’s 151A proposal, which, if enacted, would have classified FIAs as securities products.