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Rule 151a: Contracts not Considered Exempt under Section 3(a)(8)
Rule 151a prevents indexed annuities from receiving federal securities exemptions under Section 3(a)(8) of the Securities Act of 1933. Rule 151a defines the following annuity types as not meeting the qualifications from exemption: • The issuer’s contract specifies payments to be made are calculated at or after, the end of the crediting periods based on the performance of a security or a group or index of securities during the crediting periods • Amounts paid by the issuer are likely to, or exceed, the amounts guaranteed by the contract. The determination of amounts payable and guaranteed is based on the following criteria: o The guaranteed amounts under the contract are determined by considering all the charges under the contract including all charges imposed at the time issuer make the payments o The issuers guaranteed price shall be considered conclusive if the economic and actuarial methods to determine price are reasonable, the computations used by issuer in determining price are accurate, and the determination of the price is not made more than 6 months prior to the contract Contracts that have values which fluctuate according to the investment experience of a separate account do not apply to Rule 151a. This rule does not go into effect until January 12, 2011. |
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