Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, July 13, 2010

D.C. Circuit Vacates FIA Rule 151A As Arbitrary and Capricious

Last summer (July 21, 2009) the D.C. Circuit issued its opinion in American Equity Investment Life Insurance Co. v. SEC involving the agency's authority to issue Rule 151A, which provides that fixed index annuities are not "annuities" exempt under Securities Act 3(a)(8) and therefore are subject to the registration requirements.  The Court held that while the SEC's interpretation of "annuity contract" was reasonable under Chevron, it failed to properly consider the effect of the Rule upon efficiency, competition and capital formation as required by section 2(b) of the Act.  It remanded the Rule to the SEC for further consideration.  On July 12, 2010 the D.C. Circuit "reissued" its opinion and vacated the Rule because the SEC's section 2(b) analysis was arbitrary and capricious.(Download American EquityInvestment_2010)

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