SEC Adopts Rule 151A

[JMO Fan]

Obama is appointing Mary Schapiro, head of FINRA, to replace Cox as SEC Chair. Under Schapiro, FINRA (then NASD) issued the notice in 2005 requiring securities-style suitability for all indexed products. If anything, she's likely to strengthen securities regs for indexed annuities.

It appears Cox was actually trying to let the industry off easy. FINRA said all EIAs were securities several years ago. Dem congress, Obama, & Schapiro all seem likely to make things tougher for industry.

 

[Charpress]

I see regulation as being the big thing this coming year.

Obama thinks he has a mandate to regulate along the lines of FDR. Of course we now know that the regulatory morass that FDR put together ended up prolonging a 2-3 depression into a 10 year depression.

More regulation is going to be the answer for everything and the voting public will be cheering this forward because they just don't have a clue. People like Harry Reid will milk this for all it's worth. The money they have to throw around, and will have to throw around, is just going to increase the political influence of these people in parallel.

 

[djs]

Go talk to a mortgage broker about the new regulations they are having to deal with.

Then listen to Obama's speech today with the Shapiro appointment announcement.

There is nothing in the air for less regulation, it's all about more, get used to it. Don't count on appeals being successful, in this climate, they won't be. I'm not taking sides, just trying to be a bit of a realist.

Despite being a pretty staunch conservative, I'm actually for regulation that promotes transparency. I don't think this has anything to do with transparency though, and most government regulations make transparency harder, not easier (look at the truth in lending act for an example).

Problem is, people who invested in hedge funds didn't understand that hedge funds existed to avoid regulations. They were designed not to be under the scrutiny of the watchful eyes of the SEC and others. Supposedly, you have to be a savvy investor to invest in one....

Dan

 

[URDRWHO]

As someone that has been in this financial services stuff for almost thirty years, my tack will be aggressive.

I have some association with a consortium of well heeled agents and we have already hired a Philadelphia attorney to see where or if we can file action. The dissenting vote gives us a lot of leverage in the action. Here is the dissenting position: SEC Speech: Opening Remarks and Dissent Regarding Final Rule 151A: Indexed Annuities and Certain Other Insurance Contracts;(Troy A. Paredes) Washington, D.C.: December 17, 2008
I can say this, we didn't choose the most expensive practice, we chose the middle. At the middle for some of the stuff it is $375 and hour. Ouch!

The dissenting vote clearly points out that they have over stepped their authority. But it seems that since 9/11 Federal government agencies have been marching all over the Constitution. That is another rant for another time!

Anyhow, I am not a big FIA producer and for me this is not about money. This is about I am getting crotchety in my old age, I am getting tired of the Feds running roughshod over the citizens and it is my chance to get a few punches in.

I've had an insurance license for longer than I had a securities license. I had a securities license for almost 20 years and gave it up in 2000. I have no intentions of getting a securities license. I know how the brokerage houses operate and feel there is a skunk in the woodpile. IMHO the securities houses and FINRA bent the ear of Mr Cox for this decision. It benefits FINRA to get more members and benefits the brokerage industry because insurance people are out of the picture.

My Federal Represent for my district lives 3/4 a mile from my home. It has been a while since I bugged him but now is the time. His kid played on the same tennis team as my kid. I used to see him at the tennis matches. Yes, those wonderful tennis matches where people thought I was my son's grandfather. :(

So I say fight, keep making calls, keep pressing these people back. Today it is the annuity, tomorrow it could be life insurance and next year it may be the beginning of the end for health insurance.

It's interesting to check out the emphasis I'm seeing in the emails depending on where they're coming from (I have six so far).

One talks about taking this to court, digging trenches, and making sure the two years before compliance is litigated out to at least 6 years --if the bastards aren't defeated totally.

Another talks about rolling over and getting securities licensed, "gonna have to do it anyway" sort of thing.

Still another talks about all the new fixed products that this rule is bringing forth: "Oh happy days; the opportunities, the opportunities".

- - - - - - - - - - - - - - - - - -
Are you insane?

The CMA rules are ridiculous. A client gives you a lead but they can't give you the phone number and you can't walk across the hall to knock on the door. Only a government wonk could think of such nonsense. There are three pages more of such inane things. Can't buy your prospect a meal but you can buy them a snack. Can't ask your client about their auto and homeowners when talking about MA plans. Well, you can but you must wait 48 hours. Keep the Feds away from us....they are out of touch with reality.

I know a person at one of the senior housing conglomerates. She said to me that Medicare will change the MA plans without the seniors approval. The seniors come into her office saying, "they change my plans but I don't know who?" Last year their plans were changed to Humana and this year they are changed to (oops can't remember at the moment).

The Social Service woman reads the paperwork and yep, Medicare changed them.

So again, the Feds do what they want and make you and I jump like a marionette.

Maybe you were bing cynical?

Since one of the markets for EIA might be seniors, I suggest that CMS governs the sale. After all, they've done very well with MA plans.

Rick

- - - - - - - - - - - - - - - - - -
And what has HIPPA done for anyone? More rules more paperwork and private records are no more secure than they were in 1962.

Go talk to a mortgage broker about the new regulations they are having to deal with.

Then listen to Obama's speech today with the Shapiro appointment announcement.

There is nothing in the air for less regulation, it's all about more, get used to it. Don't count on appeals being successful, in this climate, they won't be. I'm not taking sides, just trying to be a bit of a realist.

Despite being a pretty staunch conservative, I'm actually for regulation that promotes transparency. I don't think this has anything to do with transparency though, and most government regulations make transparency harder, not easier (look at the truth in lending act for an example).

Problem is, people who invested in hedge funds didn't understand that hedge funds existed to avoid regulations. They were designed not to be under the scrutiny of the watchful eyes of the SEC and others. Supposedly, you have to be a savvy investor to invest in one....

Dan

 

[GreenSky]

Since one of the markets for EIA might be seniors, I suggest that CMS governs the sale. After all, they've done very well with MA plans.

Rick


Maybe you were bing cynical?

No, I was being sarcastic.

Rick

 

[Charpress]

Every single aspect of my life that I can recall where the government has gotten more involved, my life has become more miserable. Just a couple of examples that come to mind:

HIPAA: Yeah, ain't privacy great? When my son was taken to the hospital while we were out of town, we couldn't even get anyone at the hospital to tell us a thing about his condition. We had to rush back to town only to find out there was nothing serious.

Americans with Disabilities act: We almost had to scrap plans for a very small two-story office building because the morons with the permits department were insisting we had to have a $120,000 elevator.

FINRA: don't even get me started about the BS you have to go though to get anything done by them. Ever try to get through their Website? Typical bureaucracy gone wild. I can't wait for them to take over another aspect of my life.

Environmental: Before we could build a small weekend place on a river, we had to pay for a study to see if any Native-American artifacts might be impacted. Sure enough, there was a pile of tailings we were required to "protect." If you don't know what tailings are, they are a pile of oyster shells that were left by Indians at some point in the past. Or maybe not. The study wasn't conclusive but the assumption the pile "might have been" was enough. This BS delayed us a year and cost thousands. The permits from Coast Guard and about 7 other agencies were two more years.

I could go on for 20 pages, but don't want to get removed to Fight Club.

 

[Mr. Bill]

Oh come on now. The DMV? Works just fine, as long as you have 4 or 5 hours to wait. Social Security? Oh, that's just scary. Yep, this is the same federal government that didn't even know it had illegal aliens working for the TSA after 9/11. Uh, huh.

I was on a conferece call today - they mentioned that the US Supreme Court has twice knocked out that equity indexed annuities are not securities - anyone ever hear that?

I guess the lawsuits are in the works.

 

[padthaiforlunch]

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.

 

[Mr. Bill]

Really? You think Chris Cox is that bright? I don't...

 

[padthaiforlunch]

Yeah. Part of his anti-regulation stance. Just came across this:

"[Cox] in many ways worked to dismantle the SEC," Ed Nordlinger, a former longtime enforcement director in the commission's New York office, told TPMmuckraker. "He slowed everything down. I don't think he believed in heavy regulation."

And

Cox has engineered a series of procedural and tactical changes, effectively reducing the S.E.C. enforcement division’s power.