SEC Proposes to Tailor Registration for Index-Linked Annuities
The SEC proposed a "tailored form" for registering the offerings of registered index-linked annuities ("RILAs").
The SEC stated that the proposal would amend the registration and disclosure framework for RILAs by adapting the existing framework familiar to investors and issuers for variable annuity separate accounts. Specifically, the proposal would amend Form N-4 to address risks associated with RILAs, such as disclosing features of RILAs under Form N-4’s "Key Information Table," "so that investors may determine whether a RILA is an appropriate investment for them." Additionally, the proposed amendments would switch the order of the Key Information Table and Overview of the Contract items in order to avoid investor confusion and introduce terminology specific to RILAs earlier in the offerings of variable annuities.
The proposed amendments would also require issuers to comply with Securities Act Rule 156 ("Investment company sales literature") for sales literature, which prohibits materially misleading statements.
Comments on the proposal are due 30 days after publication in the Federal Register or on November 28, 2023, whichever comes later.
SEC Chair Gary Gensler commended the proposed amendments for aligning the RILA offering process with other insurance investment products and carrying out Congress’s mandate that the SEC create a registration form specific to RILAs. He added that the proposed disclosure regime was informed by investor testing conducted by the SEC Office of the Investor Advocate.
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