If you thought the dangers for Fixed Annuities ended with the defeat of 151A, you need to read the NAFA Annuity Watch below.
January 15, 2013 by N/A
NAFA is pleased to inform our members that clarification has been obtained from the Illinois Securities Department that indexed annuity products and insurance agents who sell them are not subject to securities registration under Illinois law. This resolves uncertainty over the status of indexed annuities in Illinois arising out of the controversial Pinnacle enforcement action (In the Matter of Senior Financial Strategies, Inc. d/b/a Pinnacle Investment Advisors) in which an order of the Illinois Securities Department implied indexed annuities might be considered “investment plans” subject to state securities laws.
NAFA was deeply concerned about the implications of the Pinnacle order and filed an amicus brief in court to clarify the order and began a dialogue with the Illinois Securities Department. NAFA worked hard over the last 18 months with NAFA member Fidelity & Guaranty Life, as well as other NAFA members and industry representatives, to address this issue and keep members advised of important developments concerning the treatment of fixed indexed annuities under Illinois securities laws.
On January 10, 2013, the Illinois Securities Department issued a no-action statement to Fidelity & Guaranty Life stating that the Department would not recommend enforcement action against the company or its agents for offering and selling indexed annuity contracts without registering the product as a security and without registering the agents as securities salespersons. The no-action statement is conditioned on representations made by the company that it is licensed to sell insurance in Illinois, the indexed annuities are issued and guaranteed by the company, the indexed annuities are approved for sale by the Illinois Insurance Department, and the company’s insurance agents are licensed by the Illinois Insurance Department.
It is believed this no-action statement puts to rest concerns about the status of fixed indexed annuities under Illinois Securities laws. However, companies and agents are cautioned that no-action statements contain caveats and limitations and should be reviewed carefully with their own legal counsel to determine how it applies to their own facts and circumstances.
“NAFA applauds the efforts and resolve of Fidelity & Guaranty Life in securing this favorable resolution of the matter,” stated Kim O’Brien, NAFA President & CEO. O’Brien also expressed appreciation to the Illinois Securities Director for the opportunity to engage in open dialogue and helping to find an amicable resolution.
Copies of the original Pinnacle order and the recently released no-action statement can be found here:
Illinois No Action Statement Link
