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September 22, 2016 at 11:11 AM
WASHINGTON — An Illinois appellate court panel has ruled that fixed indexed annuities are insurance and not securities products under state law.
Related: Illinois securities regulators treat indexed annuities as securities
The case stems from an enforcement action undertaken in March 2013 against Dick Van Dyke, a registered investment advisor by the Illinois Securities Department.
The Securities agency alleged that Van Dyke defrauded clients by recommending the sale of indexed annuities in violation of Illinois law.
The court held that the products sold by Van Dyke were not securities, and, furthermore, that Van Dyke had not perpetrated a fraud on his clients by selling them FIAs.
In doing so, the court reversed the Illinois secretary of state’s decision to revoke Van Dyke’s investment adviser registration, prohibit him from offering or selling securities in Illinois, fining him $330,000, and requiring him to pay witness fees of $23,500.
King Poor, lead attorney from Quarles & Brady, commented, “The court’s clear ruling in a published opinion provides much needed guidance that the law does not allow fixed indexed annuities to be regulated as securities. The historic regulation of these annuities as only insurance products remains intact.” King, based in Chicago, wrote the friend of the court brief for the National Association for Fixed Annuities.
However, a spokesman for the Securities unit, which is part of the Illinois Secretary of State’s office, is currently reviewing whether to appeal the case to the state Supreme Court. A decision must be made by Oct. 12.
