NAIFA knocks SEC annuities proposal

The National Association of Insurance and Financial Advisors said that it will oppose the Securities and Exchange Commission’s proposal to regulate 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,” Jeffrey J. Taggart, president of Falls Church, Va.-based NAIFA, said in a statement. “Unlike the case with investment products such as 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.” The SEC’s proposal, made June 25, would create Rule 151A, which would change the treatment of annuities under the insurance products exemption in the Securities Act of 1933. If the rule is adopted, indexed annuities would fall under the regulatory domain of the Financial Industry Regulatory Authority Inc. of New York and Washington and the SEC. The rule is on hold during a comment period, which ends Sept. 10.