Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.

 Skip to Content

SEC Targets Variable Insurance Products
March 31, 2018

Once again, the SEC’s Office of Compliance Inspections and Examinations (OCIE) has made variable insurance products an exam priority.

The SEC announced this priority on February 7 in a 10-page booklet of OCIE’s 2018 priorities that was at least twice as long as the booklets for the last four years. However, the additional length doesn’t shed much more light on OCIE’s precise interest in variable insurance products. Generally, OCIE says it will conduct exams of "investment advisers and broker-dealers that offer services and products to investors with retirement accounts." More specifically, OCIE says it "will focus on … sales of variable insurance products."

For 2012 and the following years, OCIE announced that variable insurance products — or, at least, variable annuities — were an exam priority. The only exception was for 2015.

Regarding variable insurance products, OCIE’s focus has shifted over the years. For 2012, OCIE said it was interested in "growth in variable insurance product assets and the emergence of new channels of distribution." In 2013, the focus was on "the growing use of alternative and hedge fund investment strategies in … variable annuity structures."

In 2014, OCIE was concerned about life insurance company "buybacks" of variable annuities. It examined "whether registered representatives are recommending that customers accept the buyback terms and, if so, whether such recommendations are suitable and what types of disclosure are made to the customer."

In 2016, OCIE examined "the suitability of sales of variable annuities to investors (e.g., exchange recommendations and product classes) as well as the adequacy of disclosure and the supervision of such sales." Similarly, in 2017, OCIE reviewed "registrants’ recommendations and sales of variable insurance products."

Looking back, OCIE has principally been interested in the distribution of variable insurance products, particularly suitability of recommendations and disclosure of pertinent information. However, OCIE hasn’t identified any dominant concern, much less undertaken any enforcement initiative.
Authored By
Image: Gary O. Cohen
Gary O. Cohen
Related Practices
Financial Services Regulatory
Related Industries
Life, Annuity, and Retirement Solutions Securities & Investment Companies
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.