In 2009, the Securities and Exchange Commission (SEC) attempted
to regulate fixed indexed annuities (FIAs) as securities by issuing
Rule 151A. Previously, FIAs were treated as exempt insurance
products. After the D.C. Circuit vacated Rule 151A, the issue was
largely resolved, for federal law purposes, by the Dodd-Frank Act,
which, generally, clarified that FIAs that comply with certain
state insurance law nonforfeiture and suitability requirements are
exempt from SEC regulation.
In recent years, however, the Illinois Securities Department,
has asserted that FIAs are securities under the Illinois Securities
Law. Two recent published opinions by Illinois appellate courts,
Babiarz v. Stearns (June 2016) and Van Dyke v.
White (July 2016), rejected that position and confirmed the
traditional understanding that FIAs are insurance products, not
securities.
