NAIFA Opposes SEC Move to Classify Indexed Annuities as Securities
August 24, 2008
NAIFA, the National Association of Insurance and Financial Advisors, said it will oppose the Securities and Exchange Commission’s proposed Rule 151A, which would classify certain indexed annuities as securities.
“In our view, these [indexed annuity] products do not meet the test for determining whether a product is a ‘security,’” commented NAIFA President Jeffrey J. Taggart. “Unlike the case with mutual funds and individual stocks, with an indexed annuity the investment risk of a downturn in the related index rests with the issuer of the product, not the consumer.”
Indexed annuity products have traditionally been viewed as insurance products under the supervision of state insurance regulators. If the SEC proposal, issued last June 25, is finalized, the SEC and the Financial Industry Regulatory Authority (FINRA) would have regulatory authority over indexed annuity sales.
NAIFA recommends that a state regulatory body develop standards for indexed annuity product design that would be implemented by state insurance regulators and used to prevent inappropriate indexed annuity products from being marketed.
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