From Structured Products Magazine
Indexed annuities, a form of insurance contract in the US, are to be placed on a regulatory level playing field with structured products following a Securities and Exchange Commission (SEC) ruling on December 17, 2008.
Following the introduction of Rule 151a, which was originally proposed in June 2008, indexed annuities that meet certain conditions will no longer be exempt from securities regulation, as most insurance contracts are. Annuity contracts that meet two specific conditions can now only be sold by broker-dealers registered with the Financial Industry Regulatory Authority, and must be registered with the SEC and sold accompanied by a prospectus, in the same way as structured products. The two conditions refer to the issuer's payouts being referenced to a specific group of securities after a calculation period, and the likelihood of conditional payouts exceeding what the investor is guaranteed to receive under the contract.
The proposed rule came after media coverage earlier this year of several cases in which senior citizens lost large sums of money after allegedly being mis-sold indexed annuity products. The SEC received thousands of letters of comment during the rule's consultation period from the insurance industry, who wanted regulation to remain in the hands of state insurance bodies. One of the SEC's commissioners, Troy Paredes, also voted against the rule, saying he felt it went beyond the reach of the SEC's intended authority.
See Structured Products Magazine's website for a full analysis of the new rule and its impact on the US structured products industry.
SPA-2008
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3 comments:
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