A federal appeals court has voided Rule 151A, the regulation that would have defined indexed annuities as securities and placed them under the jurisdiction of the U.S. Securities and Exchange Commission (SEC).
The U.S. Court of Appeals for the District of Columbia Circuit vacated its hearing from last year and ordered a rehearing in the case against the SEC. The ruling reversed the court's previous ruling, which said that the SEC's analysis of the effects of the rule on matters such as efficiency, competition and capital formation were lacking.
The Rule was issued in January 2009 and scheduled for implementation January 12, 2011. It classifies indexed annuities, which have been considered insurance products, as securities.
The ruling may become moot, as Congress is currently working to overhaul financial service regulation, which could overlap some of the areas covered by the rule.
The court's latest ruling said that the SEC "cannot justify the adoption of a particular rule based solely on the assertion that the existence of a rule provides greater clarity to an arena that remained unclear in the absence of any rule."