SEC Reopens Comment Period on Proposed Rule 151A

The SEC announced on October 10 that it was reopening for 30 days the period for the public to submit comments on proposed Rule 151A, which would classify most indexed annuities as securities. The SEC indicated this action was in response to numerous letters it had received requesting an extension of the comment period as well as the significant amount of public interest in this proposal. NAIFA had submitted a letter to the SEC on August 21 requesting an extension of time; when the SEC failed to extend the September 10 deadline for submitting comments, NAIFA completed and submitted its comments prior to the deadline.

• Read NAIFA’s Comment Letter

NAIFA opposes proposed Rule 151A because NAIFA does not believe indexed annuities should be classified as securities. While NAIFA strongly believes that people who engage in unscrupulous or misleading sales practices should be aggressively prosecuted and subject to appropriate and meaningful sanctions, issues surrounding suitability and marketing practices are not the criteria that should determine whether a financial product is or is not a security. An insurance product that does not meet the test for being classified as a security should be regulated by state insurance departments and should not be under the jurisdiction of the SEC or FINRA. This is an important principle which must be preserved in order to protect the appropriate regulation of all insurance products. An additional concern that NAIFA has with the SEC proposal is that the application of proposed Rule 151A would not be limited to indexed annuities, and that other annuity and insurance products that fit the rule's criteria could be brought within the scope of the rule. In fact, the SEC has specifically asked for public comment on whether the proposal should apply to life insurance and/or health insurance.

In addition to NAIFA’s submission of comments to the SEC on this issue, over 1,000 NAIFA members have submitted individual comments to the SEC.

The reopening of the comment period is an excellent opportunity for members who have not submitted comments to the SEC to do so. You can submit comments easily and quickly by reviewing and responding to NAIFA’s August 27 GovAlert.

NAIFA’s strength is in our member’s voices—let your voice be heard on this issue by reading and responding to the August GovAlert!

NAIFA Staff Contact: Gary Sanders, Vice President of Securities and State Government Relations, (703) 770-8192.