It is clear that Rule 151A still threatens our industry based on the Securities and Exchange Commission’s (SEC) response to the U.S. Court of Appeals for the District of Columbia on December 8, 2009. While there was a positive development in that the earliest the rule could go into effect is sometime in the second half of 2012, the industry still needs your help.

The SEC clearly intends to pursue adoption of rule 151A. As a result, the annuity industry worked to get a pair of bills introduced in Congress, HR 2733 and S 1389, that if passed into law would repeal rule 151A.

Most bills introduced in Congress are not passed into law, so there is still a long battle in front of us. Members of Congress respond when they see that their constituents care about an issue. Let them know you care! Check out the template letters on www.sec151a.com. Then call your two Senators and your Representative, fax letters to their office, and drop by their local offices in your state. In doing so, you will be protecting your own livelihood.

Here’s a Recap of Events:

On July 21, in response to a lawsuit filed by representatives of the annuity industry, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the SEC has the authority to regulate fixed indexed annuities as securities, but it sent rule 151A back to the SEC for further analysis. The court ruled that the SEC had not adequately considered the effect of rule 151A upon efficiency, competition, and capital formation. In other words, the SEC had not adequately addressed the industry's concern that the rule would destroy the fixed indexed annuity business.

One way that this court ruling was problematic for our industry is that rule 151A has an effective date of January 12, 2011. The industry's concern is the possibility that the SEC could respond to the court later in 2010, and if the court determines that the SEC's analysis was sufficient, would the industry only have a few months to prepare for the law going into effect?

The industry decided to proactively address this possibility. Old Mutual petitioned the court to ensure that the industry would have at least two years after final adoption to prepare to comply with rule 151A. In response to Old Mutual's petition, on November 6, the court asked both Old Mutual and the SEC to file legal briefs on the matter of whether the January 11, 2011 implementation date should be delayed, as well as whether the court should strike down rule 151A because of the SEC's failure to consider the effect of the rule upon efficiency, competition, and capital formation. Old Mutual then filed a brief asking the court to strike down rule 151A.

The SEC responded to the court on December 8. In its brief, the SEC stated that it is diligently working on the analysis required by the court and expects to respond to the court in the spring of 2010. However, the SEC gave two important concessions to the industry. It committed that if it decides to continue to pursue adoption of rule 151A, it will allow for a public comment period on the efficiency, competition, and capital formation analysis. And, furthermore, after this comment period is closed, the SEC will publish the final rule and delay its implementation until two years following the publication date.

What this all means is that Rule 151A is still very much a threat to your business and the clients you serve. When you take a few minutes to contact your Senators and members of Congress today, you are helping to make sure a product that has proven to be very beneficial to millions of Americans is not lost or restricted.

This is a positive development, but the industry still needs your help.