The American Council of Life Insurers (ACLI) says a new federal appeals court ruling should help an annuity sales standard it likes spread.
A three-judge panel at the 2nd U.S. Circuit Court of Appeals ruled Friday that the U.S. Securities and Exchange Commission did have the authority to adopt Regulation Best Interest, and that Reg BI is not arbitrary and capricious.
ACLI President Susan Neely said in a statement that she believes the court made the right call. “It affirmed enhanced consumer protections,” Neely said. “The result is continued progress in safeguarding access for all consumers and securing harmonized standards across the country,”
- A copy of the 2nd Circuit ruling is available here.
- An article about the underlying ruling is available here.
Attorneys general from California, New York and five other states led by Democrats brought the suits. They have asserted that Reg BI fails to meet the statutory requirements set forth in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and that the SEC should have required broker-dealers to meet the same kind of fiduciary standard that applies to investment advisers.
Judge Michael Park wrote the opinion for the panel.
All three judges were appointed to the panel by President Donald Trump.
One judge, Richard Sullivan, dissented in part, to make the case that the other judges should have been tougher on the petitioners.
The petitioners lacked any standing to bring their suit, and the other judges should not have bothered to analyze the merits of the petitioners’ arguments, Sullivan writes in a partial dissent.
The new ruling is just the latest event in a long-running financial services sales standards battle.
The U.S. Department of Labor (DOL) tried, under former President Barack Obama, to impose a strict fiduciary standard on all investment advisers and broker-dealers, and implementation guidelines that could have eliminated use of sales commissions in sales of non-variable indexed annuities.