SEC 151 faces a double-whammy in Washington

Whatever the case, parties who have been working to overturn 151A since its appearance nearly two years ago say they are hopeful that both of the summer's legal developments will, for once and for all, do away with 151A. Andy Unkefer, president and CEO of Arizona's Unkefer and Associates and a key player in the anti-151A battle, says the two political developments should serve to end 151A forever.

"Now that the Court of Appeals has vacated SEC Rule 151a, you might think the battle is over," he says. "However, the SEC could attempt to create another, more narrowly defined rule and still capture the product as a registered security. This is why passing the Harkin Amendment is still mission-critical to the insurance industry. The Harkin Amendment clarifies once and for all that Fixed Indexed Annuities are not a security.

"Also, I believe that the Court's action is directly related to the fact that the Harkin Amendment was approved by the House and Senate Conference Committees," he adds. "It is clear that our legislation will become law. The decision of the Court came right on the heels of that work on Capitol Hill. I am certain that this tipped the scales in our favor."

Unkefer has been heavily involved in the Coalition for Indexed Products, which hosted a popular anti-151A website and later organized several rounds of lobbying fly-ins in Washington D.C., where producers and industry representatives met with their elected officials.

He admits that the group's most important move on the legislative end was to take the advice of several professional lobbyists outside of the industry and to figure out the most direct path to power–other anti-151A efforts such as the Meeks/Price bill had been good first efforts, but Harkin was in a position to actually get something accomplished, he notes. Coupled with the outcome of the lawsuits, the efforts seem to have worked.

Sheryl Moore, annuity industry advocate and president of Advantage Group Associates, says she also hopes that the passage of the Wall Street Reform act will bring some much-desired closure to the issue.
"This legislative strategy has always been Plan A and if we want to ensure that indexed annuities will be regulated as fixed insurance product indefinitely, we need to continue that strategy," she says.