I'm starting to think that Cox did us a favor. He passed a reulation so flawed, it it likely to be overturned in court, which will futher establish that FIA's are not securities and limiting future SEC action.
You're dreaming. Don't count on this getting overturned, no matter how flawed it may be. The financial sector is up for a power grab, and the bigger the government entity, the more likely they are to grab on and not let go.
I don't necessarily agree with the ruling, but I wouldn't count on it getting overturned. Fight it if you want, but plan on it sticking around.
The Reagan years pendulum has now swung way the hell the other direction to more government intervention and regulation. Cox is history regardless of what you think of him and the next 8 years are going to be the Big Government Years.
You would normally take comfort in the idea that the pendulum will go the other way eventually. Unfortunately, I think it will be too late.
I cant see it being overturned either. Those of us serious about the products and the business will adapt, whether it is to the new products or licensing, we have a year or two to get it together.
------------------------------------
Chuck
If you think your boss is stupid, remember: you wouldn't have a job if he was any smarter.”
Commissioner Paredes outlines the arguments that will be used to fight this. I think the most effective argument to overturn this ruling is the "more likely than not" test.
Speech by SEC Commissioner:
Opening Remarks and Dissent Regarding Final Rule 151A
Indexed Annuities and Certain Other Insurance Contracts
by
Commissioner Troy A. Paredes
U.S. Securities and Exchange Commission
Open Meeting of the Securities & Exchange Commission
Washington, D.C.
December 17, 2008
Thank you, Chairman Cox.
I believe that proposed Rule 151A addressing indexed annuities is rooted in good intentions. For instance, at the time the rule was proposed, the Commission watched a television clip from Dateline NBC that described individuals who may have been misled by seemingly unscrupulous sales practices into buying these products. Part of our tripartite mission at the SEC is to protect investors, so there is a natural tendency to want to act when we hear stories like this.
However, our jurisdiction is limited; and thus our authority to act is circumscribed. Rule 151A is about this very question: the proper scope of our statutory authority.
In our effort to protect investors, we cannot extend our reach past the statutory stopping point. Section 3(a)(8) of the Securities Act of 1933 ('33 Act) provides a list of securities that are exempt from the '33 Act and thus, by design of the statute, fall beyond the Commission's reach. The Section 3(a)(8) exemption includes, in relevant part, "[a]ny insurance or endowment policy or annuity contract or optional annuity contract, issued by a corporation subject to the supervision of the insurance commissioner . . . of any State or Territory of the United States or the District of Columbia." I am not persuaded that Rule 151A represents merely an attempt to provide clarification to the scope of exempted securities falling within Section 3(a)(8). Instead, by defining indexed annuities in the manner done in Rule 151A, I believe the SEC will be entering into a realm that Congress prohibited us from entering. Therefore, I cannot vote in favor of the rule and respectfully dissent.
Rule 151A takes some annuity products (indexed annuities), which otherwise may be covered by the statutory exemption in Section 3(a)(8), and removes them from the exemption, thus placing them within the Commission's jurisdiction to regulate. If the Commission's Rule 151A analysis is wrong — which is to say that indexed annuities do fall within Section 3(a)(8) — then the SEC has exceeded its authority by seeking to regulate them. In other words, the effect of Rule 151A would be to confer additional authority upon the SEC when these products, in fact, are entitled to the Section 3(a)(8) exemption.
The Supreme Court has twice construed the scope of Section 3(a)(8) for annuity contracts in the VALIC and United Benefit cases.1 I believe the approach embraced by Rule 151A conflicts with these Supreme Court cases. Although neither VALIC nor United Benefit deals with indexed annuities directly, the cases nevertheless are instructive in evaluating whether such a product falls within the Section 3(a)(8) exemption. And despite the adopting release's efforts to discount its holding, at least one federal court applying VALIC and United Benefit has held that an indexed annuity falls within the statutory exemption of Section 3(a)(8).2
When fixing the contours of Section 3(a)(8), the relevant features of the product at hand should be considered to determine whether the product falls outside the Section 3(a)(8) exemption. Rule 151A places singular focus on investment risk without adequately considering another key factor — namely, the manner in which an indexed annuity is marketed.
Moreover, I believe that Rule 151A misconceptualizes investment risk for purposes of Section 3(a)(8). The extent to which the purchaser of an indexed annuity bears investment risk is a key determinant of whether such a product is subject to the Commission's jurisdiction. Rule 151A denies an indexed annuity the Section 3(a)(8) exemption when it is "more likely than not" that, because of the performance of the linked securities index, amounts payable to the purchaser of the annuity contract will exceed the amounts the insurer guarantees the purchaser. This approach to investment risk gives short shrift to the guarantees that are a hallmark of indexed annuities. In other words, the central insurance component of the product eludes the Rule 151A test. More to the point, Rule 151A in effect treats the possibility of upside, beyond the guarantee of principal and the guaranteed minimum rate of return the purchaser enjoys, as investment risk under Section 3(a)(8). I believe that it is more appropriate to emphasize the extent of downside risk — that is, the extent to which an investor is subject to a risk of loss — in determining the scope of Section 3(a)(8). When investment risk is properly conceived of in terms of the risk of loss, it becomes apparent why indexed annuities may fall within Section 3(a)(8) and thus beyond this agency's reach, contrary to Rule 151A.
Not only does Rule 151A seem to deviate from the approach taken by courts, including the Supreme Court, but it also appears to depart from prior positions taken by the Commission. For example, in an amicus brief filed with the Supreme Court in the Otto case,3 the Commission asserted that the Section 3(a)(8) exemption applies when an insurance company, regulated by the state, assumes a "sufficient" share of investment risk and there is a corresponding decrease in the risk to the purchaser, such as where the purchaser benefits from certain guarantees. Yet Rule 151A denies the Section 3(a)(8) exemption to an indexed annuity issued by a state-regulated insurance company that bears substantial risk under the annuity contract by guaranteeing principal and a minimum return.
In addition, Rule 151A seems to diverge from the analysis embedded in Rule 151. Rule 151 establishes a true safe harbor under Section 3(a)(8) and provides that a variety of factors should be considered, such as marketing techniques and the availability of guarantees. The Rule 151 adopting release even indicates that the rule allows for certain "indexed excess interest features" without the product falling outside the safe harbor.
------------------------------------
Hey Frank, Your goat's are inspirational!
An even more critical difference between Rule 151 and Rule 151A is the effect of failing to meet the requirements under the rule. If a product does not meet the requirements of Rule 151, there is no safe harbor, but the product nevertheless may fall within Section 3(a)(8) and thus be an exempted security. But if a product does not pass muster under the Rule 151A "more likely than not" test, then the product is deemed to fall outside Section 3(a)(8) and thus is under the SEC's jurisdiction. In essence, while Rule 151 provides a safe harbor, Rule 151A takes away the Section 3(a)(8) statutory exemption.
I am not aware of another instance in the federal securities laws where a "more likely than not" test is employed, and for good reason. A "more likely than not" test does not provide insurers with proper notice of whether their products fall within the federal securities laws or not. If an insurer applies the test in good faith and gets it wrong, the insurer nonetheless risks being subject to liability under Section 5 of the Securities Act, even if the insurer had no intent to run afoul of the federal securities laws. In addition, under the "more likely than not" test, the availability of the Section 3(a)(8) exemption turns on the insurer's own analysis. Accordingly, it is at least conceivable that the same product could receive different Section 3(a)(8) treatment depending on how each respective insurer modeled the likely returns.
Further, I am concerned that Rule 151A, as applied, reveals that the "more likely than not" test, despite its purported balance, leads to only one result: the denial of the Section 3(a)(8) exemption. In practice, Rule 151A appears to result in blanket SEC regulation of the entire indexed annuity market. The adopting release indicates that over 300 indexed annuity contracts were offered in 2007 and explains that the Office of Economic Analysis has determined that indexed annuity contracts with typical features would not meet the Rule 151A test. Indeed, the adopting release elsewhere expresses the expectation that almost all indexed annuity contracts will fail the test. If everyone is destined to fail, what is the purpose of a test? Further, there is at least some risk that in sweeping up the index annuity market, the rule may sweep up other insurance products that otherwise should fall within Section 3(a)(8).
The rule has other shortcomings, aside from the legal analysis that underpins it. These include, but are not limited to, the following.
First, a range of state insurance laws govern indexed annuities. I am disappointed that the rule and adopting release make an implicit judgment that state insurance regulators are inadequate to regulate these products. Such a judgment is beyond our mandate or our expertise. In any event, Section 3(a)(8) does not call upon the Commission to determine whether state insurance regulators are up to the task; rather, the section exempts annuity contracts subject to state insurance regulation.
Second, as a result of Rule 151A, insurers will have to bear various costs and burdens, which, importantly, could disproportionately impact small businesses. Some even have predicted that companies may be forced out of business if Rule 151A is adopted. Such an outcome causes me concern, especially during these difficult economic times. Even when the economy is not strained, such an outcome is disconcerting because it can lead to less competition, ultimately to the detriment of consumers.
Third, the Commission received several thousand comment letters since Rule 151A was proposed in June 2008. Consistent with comments we have received, I believe that there are more effective and appropriate ways to address the concerns underlying this rulemaking. One possible alternative to Rule 151A would be amending Rule 151 to establish a more precise safe harbor in light of all the relevant facts and circumstances attendant to indexed annuities and how they are marketed. A more precise safe harbor would provide better clarity and certainty in this area — regulatory goals the Commission has identified — and would preserve the ability of insurers to find an exemption outside the safe harbor by relying directly on Section 3(a)(8) and the cases interpreting it. I believe further exploration of alternative approaches is warranted, as is continued engagement with interested parties, including state regulators.
Okay, Okay. Can someone put this in simple terms that I can understand. I'm feeling stupid here. I read all of the new changes and it is not my market. So what does this really mean in simple terms?
Is it that there are more rules and now the agent has to do more or what?
I feel like I should have my lawyer read the new rules and explain it to me. Someone please make it simple to us that don't understand this market.
I quote someone who was there, the Pres of the largest Annuity Marketing Group...
The two-pronged test to disallow exemption under Section 3(a)(8) of the Securities Act of 1933 is slightly modified to assure that traditional, non-indexed annuities remain as non-securities. Nearly every other non-security, fixed indexed annuity on the market today will meet the test of 1) having interest linked to a securities index and 2) having a 50% chance or greater of receiving interest in excess of guarantees. As such, they would be disallowed from using the securities exemption. The SEC anticipates this would mean products of this type would have to be registered by insurance companies with the SEC and only registered representatives could sell them.
The effective date has been extended one additional year from the original proposal to January 12, 2011. It is also apparent that the SEC anticipates a legal challenge to their rule in the near future.
Right. I think the 50% or better test is so ambiguous that it provides the best hope for overturning 151A.
Originally Posted by patch36
I quote someone who was there, the Pres of the largest Annuity Marketing Group...
The two-pronged test to disallow exemption under Section 3(a)(8) of the Securities Act of 1933 is slightly modified to assure that traditional, non-indexed annuities remain as non-securities. Nearly every other non-security, fixed indexed annuity on the market today will meet the test of 1) having interest linked to a securities index and 2) having a 50% chance or greater of receiving interest in excess of guarantees. As such, they would be disallowed from using the securities exemption. The SEC anticipates this would mean products of this type would have to be registered by insurance companies with the SEC and only registered representatives could sell them.
The effective date has been extended one additional year from the original proposal to January 12, 2011. It is also apparent that the SEC anticipates a legal challenge to their rule in the near future.
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If allowed to stand, it will require anyone selling an FIA or EIUL policy to be securities licensed.
This will lead to less competition by agents and by offerings. Modified EIA's will become less attractive because they will have a smaller upside.
New products will be rich on the income account side, so not all hope is lost.
Originally Posted by Markingriffin
Okay, Okay. Can someone put this in simple terms that I can understand. I'm feeling stupid here. I read all of the new changes and it is not my market. So what does this really mean in simple terms?
Is it that there are more rules and now the agent has to do more or what?
I feel like I should have my lawyer read the new rules and explain it to me. Someone please make it simple to us that don't understand this market.
Last edited by padthaiforlunch : 12-21-2008 at 07:25 PM.
Reason: Posts merged
Unless you have a working knowledge of FIA's, it is really difficult to get a handle on.
Because the vote was so lopsided in favor of regulation, and with the regulatory mood sweeping DC, I imagine it will stand pretty much intact in the end. At this point all we can do is wait to see the new products and how this all shakes out in the future.
If any insurance product mentions, hints at, alludes to, or in any manner brings up the possibility that returns on the product are related to an index, the stock market, a security, a group of securities, or anything remotely connected to whatever the SEC currently regulates, than that product will also be regulated by the SEC -'cuz it is more likely than not that the SEC will want to regulate it.
They reacted to dishonest insurance agents swindling consumers? Hmmm...I am securities licensed as well and I don't think you have to be a rocket scientist to know that there are dishonest Securities Reps...The big question is does this protect the consumer more less or the same...and I would honestly say it protects less...with all the forms we have to cya us on the Security side I think consumers will be less not more informed but will sign forms stating that they understand this and that and does this mean a 6 page brochure becomes a 100 page prospectus?
does this mean a 6 page brochure becomes a 100 page prospectus?
That is exactly what will happen. I have used a prospectus more than one to convince someone to get out of a variable into a fixed product. Consumers never read a prospectus, but we can use them to yellow-highlight the scary, good stuff that is usually found around page 78.
A prospectus is about as much help to the average Joe as the IRS "estimates" of how much time they think you will spend on a particular tax form or the "paperwork reduction act" BS that burns up paper telling you how much paper is being burned up to tell you...
That is exactly what will happen. I have used a prospectus more than one to convince someone to get out of a variable into a fixed product. Consumers never read a prospectus, but we can use them to yellow-highlight the scary, good stuff that is usually found around page 78.
A prospectus is about as much help to the average Joe as the IRS "estimates" of how much time they think you will spend on a particular tax form or the "paperwork reduction act" BS that burns up paper telling you how much paper is being burned up to tell you...
My concern would not be limited just to what the SEC would do to annuities, I would be more concerned about what the B/D's would do to your non-securities business as part of their responsibility to oversee everything in your shop. You have agents, some here as well, who think "oh, well I will just go and get a securities license to sell annuities then I will be all set" and that they will just continue to go on their independent, merry way with their health insurance sales etc. Rude awakening coming there.
I gave up my Series 7 to get those clowns out of the rest of my business. I dont need to have the Compliance Department (also known as the Sales Prevention Department) of a B/D approving my ads and business cards and phone scripts for something they dont even know squat about.
Yes, I understand that there are some B/D's who stay out or some of this. That is only because they are not doing what they are required to do so that is not pretty either and subject to change at any momemt.
Anyone else here feel my pain on this?
------------------------------------ The Bolsheviks are dining in the capital.
If allowed to stand, it will require anyone selling an FIA or EIUL policy to be securities licensed.
This will lead to less competition by agents and by offerings. Modified EIA's will become less attractive because they will have a smaller upside.
I was afraid you would say that, but it's true. 151A may also make IUL/EIUL life insurance a "security" as well, which would mean goodbye 6 page color brochures and hello 320 page prospectuses made out of recycled paper. I sell alot of EIUL because it's a great product and offers a great alternative to Whole Life. I really would be irritated to fill out a "Suitability" form that states in bold that EIULs are HIGH RISK INVESTMENTS during every single appointment. Why? Because it's RIDICULOUS.
Also, a comment on the FIAs. Though I have a Series 7 and 66, I am still strongly opposed to 151A because of what the SEC will do to these great products. Did you know it costs money - LOTS of money - to register and maintain products as securities? More costs to the insurance companies mean they will pass these expenses off to the agent and consumer in the form of crappier products (ridiculously lower caps, over-complicated prospectuses, intimidating language on RISKS) and also significantly drop agent commissions (to where you can't feed your family anymore selling annuities - you have to sell mutual funds! Oh wait, that's what they're TRYING to do!).
The SEC's actions hurt consumers by giving them watered down, expensive products, it hurts agents by reducing their compensation (thus encouraging more hustling for prospects rather than taking care of the ones they have), and it opens the door to full and complete control/regulation of the insurance business.
The SEC can't even police their own industry in the securities world - how do they think they can police the securities AND insurance biz?
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Originally Posted by Charpress
Every single aspect of my life that I can recall where the government has gotten more involved, my life has become more miserable.
Big government, more rules, stricter laws, more government agencies to "protect" the American consumer means more oppression and less freedom.
What we need is another Reagan to clip the SEC's wings, fire useless government bureaucrats just there for the paycheck, and dismantle FINRA and leave more regulation authority to the states.
Can you say Bobby Jindal for President 2012?
------------------------------------
BiggitySwat - Licensed Stockbroker
Life and Health Licenses, Series 7, Series 66.
Last edited by BiggitySwat : 12-23-2008 at 02:13 AM.
Reason: Posts merged
It appears EIUL and MVAs are probably securities, but probably not UL, interest-sensitive WL, or non-indexed annuities:
Group Warns SEC Rule May Affect InsuranceBY ARTHUR D. POSTAL WASHINGTON—NU Online News Service, Dec. 22, 2008
The new Securities and Exchange Commission rule subjecting equity indexed annuities to federal oversight may also apply to indexed life insurance products, a trade group cautions.
The Association for Advanced Life Underwriting is warning its members that the same rules that spell out how to calculate and credit interest on EIAs could also cover indexed life insurance products.
...
The AALU bulletin said its interpretation of the new rule is that typical indexed annuity contracts will fall within the scope of the rule and be regulated as securities, but contracts declaring discretionary excess interest in advance generally would appear to fall outside the rule. ...
http://www.lifeandhealthinsurancenew.../12/22-aalu-ap This seems to leave indexed products issued prior to 2011 in limbo. If post-2010 indexed products are securities, the same product issued in 2009 would seem to be a security. The SEC might leave them alone, but it's unclear whether courts would refuse lawsuits on indexed products issued since 1995.
------------------------------------
I thought this WAS a real job!
Over the last few days I have seen so many different opinions on this ruling. The bottom line is that it doesn't go into effect for 2 years.
So many of you have pointed that out and I agree wholeheartedly that the legal system will do it's job and tie this one up in the court systems until the lawyers have made their money.
Worst thing that could happen...that date (Jan. 2011?) gets pushed back.
Today (December 17, 2008) the Securities and Exchange Commission (SEC) adopted their proposed rule 151a. The proposal passed by the SEC's board on a vote of 4 in favor and 1 opposed. This rule makes Fixed Indexed Annuities (FIAs) a security in two years. The targeted effective date is January 12, 2011.
IMPORTANT!
THE WORST CASE SCENARIO TODAY IS THAT YOU HAVE TWO FULL YEARS TO COMPLY
If you desire to continue selling FIAs, simply stay right where you are. The fastest this process can happen is 2-years and there are elements already in play that will extend this period in our opinion. The worst thing you can do is run out and take your securities exam and fall into a Broker/Dealers supervision prematurely.
Here's why:
Over the last year, we have participated closely with other concerned insurance professionals and companies to oppose this rule. The leading companies have already formed a Coalition for Indexed Products. The Coalition for Indexed Products is prepared to file legal action to bring this issue before a judge.
Historically, indexed annuities have already been tested in court and the findings have always been that they are NOT a security. We believe this venue will allow the Coalition to succeed and keep our products within the fixed arena. This legal process can take many years to complete.
So, if the insurance companies do not fight back, we have 2 years before we must change. If they do fight through legal channels we will see the window for "business as usual" stay open for a much greater period of time.
Your Next Steps...
dedicated to seeing this issue through to the end and providing independent agents with an accurate voice on this topic. We will let you know of the activities of the Coalition for Indexed Products and we will advise you as to the most profitable way to proceed for your practice.
New products and new opportunities...
One positive aspect of this SEC activity is that insurers have now launched highly innovative traditional fixed annuities that include benefits not available in FIAs! We have been asked by hundreds of agents, "What if I do not want to become securities licensed? Will I be able to make a good living without an FIA to sell?" The answer is YES! We are fully confident that the new traditional products can completely replace the sales opportunities you had with FIAs.
What to aviod... Don't make any sudden moves!
Stay calm, sit tight and wait for the first steps to take place. The first steps must be taken by the insurance companies, not by the producers. You will be able to make the right moves after they do.We will keep you informed so you can go forward with confidence and solid profits in the future! Commenting Period Ends
The re-opened commenting period ended November 17, 2008. Taking the fight to D.C.
Insurance Marketing firms join Indexed Annuity Carriers to fight SEC on Captial Hill in Washington DC.
How can you help?
Washington Trip Update:
September 23, 2008
As American lawmakers wrestled with the largest bailout in US history, a select group of annuity marketing firms and life insurance carriers marched on Capitol Hill to defend the future of an industry. The Security and Exchange Commission (SEC) seeks to make Fixed Indexed Annuities (FIAs) a registered security and therefore, under their supervision.
As the SEC seeks to approve its own proposed rule 151a, this federal agency is reeling from allegations of inadequate oversight within the investment community that is leading lawmakers to consider an overwhelming $700 billion bailout for large Wall Street firms.
The turmoil within the investment community offers an interesting contrast to the safety and security we offer through our Fixed Indexed Annuities. FIAs are competitive savings vehicles that should continue to be regulated as an insurance product, not an investment. If the SEC succeeds in capturing this product, consumers will lose the valuable minimum guarantee protections of the product that make it a fixed savings instrument to begin with. In addition, the consumer will be exposed to a much weaker regulatory support when it comes to conflict resolution.
Under insurance regulation, a state department of insurance can pressure an insurer to refund annuity premiums to a policyholder if the department considers any sale inappropriate. Under the SEC, an unresolved complaint must be decided by a judge or arbitrator. This means the consumer must hire legal representation which adds more cost to the consumer.
Insurance companies point to the recent market turmoil and their consistent stability to demonstrate the value of their conservative approach. Because insurers must maintain required solvency ratios, surplus levels and invest only in the most pristine bond portfolios, insurance companies have remained a foundational block to the US economy for hundreds of years.
Insurers state that during the extraordinary losses witnessed on Wall Street, their annuity owners experienced no loss at all.
The lobbying effort in Washington, DC was organized by a coalition of insurance carriers who offer FIAs to consumers through a large network of independent insurance professionals. Executives from American Equity, Old Mutual, Midland National, and LSW were present to take their message directly to lawmakers. During the one day event, over 110 members of the house and senate were visited. The coalition was aided by Washington, DC law firm, Baker and Hostetler who helped organize the effort.
The day began with a brief meeting to discuss the approach. Baker and Hostetler provided each participant with an information kit and talking points to share with lawmakers. The law firm also reported that approximately 2,500 comments had been posted to the SEC during the short comment period. "Ninety percent of these comments clearly opposed their proposed rule," stated Tom McDonald a partner in the firm
"I was pleased with the receptive attitude lawmakers showed to us during our visit," stated one participant. "They understood what was at stake and could see the value of keeping a viable savings product in the market; one that has proven to protect against loss for over 10 years now. If everything becomes a security, the savers will have no place to go to safely protect the assets they have worked so hard to accumulate over their lifetime."
Unlike other savings products such as certificates of deposit (CDs) or money market accounts, annuities offer additional benefits such as tax-deferred growth and income planning capabilities. Many annuities also provide additional liquidity and enhanced benefits for personal emergencies such as a nursing home confinement.
The attendees feel there is a chance to keep the product out of securities registration. As one stated, "I am confident we can prevail. If our lobbying effort is not successful, the coalition of indexed annuity carriers is prepared to litigate against this predatory rule. Current law, our long history and the principal of consumer protection is all in our favor. I am a firm believer in the independent agent and I am here in DC today to represent their interests."
too long for one post...
The Securities and Exchange Commission (SEC) is proposing a rule now known as 151A that if adopted, would make Fixed Indexed Annuities a registered security. Please note: This is only a proposed rule. It has not been adopted and therefore, no action is needed by you at this time. You may continue selling Indexed Annuities without a securities license.
The rule is essentially looking at two tests to evaluate if an Indexed Annuity product would be considered a security.
The amounts payable are calculated in whole or in part by reference to a security or a group of securities or an index, and
The amounts payable by the insurer are more likely than not to exceed the amounts guaranteed under the contract ("more-likely-than-not" test).
As you can see, the language is sufficiently vague so that it might be adapted to various versions of product.
The first test certainly affects all indexed annuities as amounts payable are calculated in whole or in part by reference to an index.
It is interesting to note that the second test likely affects all annuities because all fixed annuities are designed to exceed the legal guaranteed minimum.
Now here is an important point; to be considered a security under this rule a product must meet both tests.
Again, we want to stress to you that this is a proposed rule at this point, not an adopted rule. Prior to adopting a rule, the SEC will follow their prescribed process.
The entire language of the proposed rule has been released for public comment back to the SEC. The public comment period closes on September 10, 2008. This allows anyone interested to submit their opinions on whether this rule should be adopted or rejected. As you navigate this website, you will see how you can immediately post your comments to the SEC. We have even provided you with suggested language you may find useful in helping you compose your thoughts.
Once the public comment period is closed, the SEC will deliberate over the comments and then vote to adopt or reject the proposed rule. They may also consider modifying or tabling this topic as well.
Should the SEC adopt the rule, immediate compliance is NOT required. There is a 12 month period after the adoption of the rule to allow companies and agents to move toward compliance. In other words, for the 12 months following adoption, agents, agencies and wholesalers may continue to operate as they currently do without violating the rule. So, even if the rule were adopted today for example, you would have 12 months before you would be required to actually execute any changes.
We have received word from several insurance companies that they are prepared to file suit against this proposed rule should the SEC choose to adopt it. Based on past case law and existing safe harbor rules, we believe there is an excellent opportunity to prove that a Fixed Indexed Annuity is NOT a security. So, even if the rule is adopted by the SEC, it could be overturned in a legal proceeding.
You may be wondering how things will change in the event that the rule is adopted and remains in force. Those wishing to stay involved with Indexed Annuity sales would need to become securities licensed at that time. It may also impact certain business models that do not match up well with securities regulations. We will be consulting with the legal experts and industry leaders to keep you apprised of the situation as it progresses as well as identify options you may need to consider in the future. Just visit this site on a regular basis or register and we will notify you when anything changes on this important issue. If you would like to be included in any future communication regarding this mission critical topic, please register today by completing all the information requested on the right side of this web page. Then, click the submit button. We will be updating you each step of the way.
Today, it is business as usual but we must begin to keep a watchful eye on the horizon so that we can restructure where necessary to continue serving every consumer in an honorable and professional manner."
It all comes down to lobbying and there will be more of that under the dems than ever before. BTW, did anyone catch the HBO special to BHO last night? The nuts in Hollywood will be running this country because of the rock star POTUS. HBO and BHO The same three letters...BHO the media creation...HBO the media creation...we are so in trouble as a nation and as an industry.
Re: SEC Adopts Rule 151A
It appears EIUL and MVAs are probably securities, but probably not UL, interest-sensitive WL, or non-indexed annuities: 
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