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Life, Annuity, and Retirement Solutions


Overview

We serve the needs of the life, annuity, and retirement solutions industry. We have represented life insurance companies throughout the United States in national bet-the-company class action and complex commercial litigation cases. Our attorneys are recognized as not just “litigators” but as experienced trial lawyers with the depth to efficiently and creatively defend against both traditional and new issues raised by plaintiffs’ lawyers under state and federal law. We bring an integrated and complementary approach to servicing our life insurance clients by drawing on the collective experience of our business, regulatory, and litigation attorneys. 

The life insurance industry group works closely with our practice groups to provide counseling, litigation, and dispute resolution to life insurers in the securities, ERISA, federal tax and state regulatory areas on product development, sales and distribution issues, business combinations and state regulatory advice, market conduct examinations, and hearings. Our firm and its lawyers have been recognized in numerous journals as authorities in life insurance industry matters, including in a recent BTI “Power Elite” Survey of General Counsel at Fortune 1000 companies. We were also recognized as a “Short List” firm in the “Client Votes of Confidence: Go-To Law Firms” category as well as a “Recommended Law Firm” in the “Client Advocates: Law Firms that Clients Recommend” category. Additionally, we were recognized as both a “Short List” and “Predominant Recommended Firm” in the insurance industry.
 

  • Insurance Business Counseling

    Our business and regulatory attorneys counsel life insurance clients on a variety of transactions, business arrangements, insurance products, and distribution matters under federal and state securities laws, FINRA regulations, and state insurance laws. Our lawyers have worked with the various state and federal regulators. Our attorneys counsel insurance industry clients on business matters in the following key areas:

    Product Design 
    Including work with actuaries and product filing staff for fixed index annuities, variable products, market-value-adjustment products, synthetic annuities, and other innovative products. 

    Securities Regulation 
    Including status questions under the Securities Act, Securities Exchange Act, and Investment Company Act of 1940 (1940 Act); 1940 Act regulation of separate accounts and mutual funds that serve as underlying investment vehicles for insurance products; and compliance with the federal and state securities laws, including the Sarbanes-Oxley Act. 

    State Insurance Regulation 
    Including contract and form filings; licensing of insurance companies, producers, managing general agents, underwriters, and consultants; and compliance with required contract terms, standard non-forfeiture law, disclosure, replacement, suitability, unfair trade practice, and other regulatory requirements. 

    Compliance Oversight and Best Practices 
    Including administrative and operational compliance with state and federal regulatory requirements, mock regulatory examinations, and development of industry best practices. 

    Distribution and Marketing 
    Including structuring arrangements between insurance companies and banks, brokerage firms, and marketing organizations; and assistance with FINRA regulation of member firms and producers. 

    Market Conduct Examinations and Regulatory Investigations 
    Including responding to initial regulatory findings and initiating and participating in contested case hearings. 

    Advertising Review 
    Including substantive reviews for compliance with both state insurance and federal securities laws and regulations; assistance with state and FINRA filings; and assistance with responding to, and resolving, regulatory comments. 

    Organization and Transactions 
    Including life insurance company formation, mergers and acquisitions through stock and asset acquisition, including reinsurance arrangements, reorganizations, and dissolutions; and separate account transfers and reorganizations. 

    Privacy and Data Security Regulations 
    Including compliance with SEC Regulation S-P and state insurance privacy requirements. 

    Private and Public Offerings and Financial Reporting 
    Including SEC-registered offerings and private placement of U.S. and offshore offerings of insurance securities products, and Exchange Act financial reporting. 

    Tax and ERISA 
    Including a broad range of matters related to qualified and nonqualified retirement plans, health and other welfare benefit plans, annuities and IRAs, including the tax qualification of annuities and life insurance contracts; and representing clients before the Internal Revenue Service and the Department of Labor.
     

  • Litigation and Dispute Resolution Services
    We represent life insurance clients in federal and state courts at all stages of litigation, primarily as lead defense counsel, but also as the initiator of actions, pursuing our clients’ claims. Our experience includes disposal of actions, including putative class actions, at the earliest stages of the litigation, as well as bench and jury trials of major class and mass actions and high-dollar individual civil and criminal cases. We have also worked as relief counsel where clients experienced an adverse result while represented by other counsel. In addition, we have preserved trial court wins on appeal, and obtained appellate reversals of adverse rulings, including certifications of class actions. 

    Learn more about our life insurance and annuities litigation practice.

     
  • SEC/FINRA
    We represent clients on a broad range of matters before the SEC and FINRA. Our lawyers focus on providing practical advice and insights based on decades of experience. Learn more about our securities capabilities.

     
  • Investment Companies and Advisers
    We provide a full range of services to investment companies and their boards of directors/trustees, and investment advisers. 

    Organization and Operation 
    We help organize a variety of different registered and unregistered investment companies, including mutual funds, fund of funds, closed-end funds, and ETFs. We help organize investment advisers. We also advise on operational requirements imposed by the federal securities laws. Whether clients are negotiating a secured lending arrangement or preparing for a board meeting, we can assist. 

    Registration, Proxies, and Reports 
    Our lawyers guide clients through the SEC registration process, from early preparation and vetting of personnel through effectiveness of their registration statement or approval of their adviser application. We also advise on federal and state requirements for shareholder meetings and proxy voting, as well as the requirements for periodic reports to shareholders and to the SEC.

    Compliance 
    We help develop Rule 38a-1 and Rule 204(6)-7 compliance programs and policies, conduct annual compliance reviews, and prepare for regulatory examinations. Our team includes members with experience as chief compliance officers and SEC-approved independent compliance consultants. 

    Regulation 
    Our lawyers have extensive experience with matters involving the regulation of investment companies and investment advisers. This experience includes, for example, analyzing the need to register with the SEC, preparing interpretive and no-action requests to the SEC staff, and seeking exemptive relief from SEC regulation. We advise on questions that arise under state “blue sky” laws, the Commodity Exchange Act, and all federal securities laws. 

    Transactions 
    We advise on a variety of transactions involving investment companies and advisers, such as mergers, asset transfers, portfolio “lift outs,” substitutions, redomestications, intact transfers of separate accounts, and liquidations. In particular, we advise on the many regulatory, tax, and due diligence issues that arise when an investment company or adviser is involved in a larger corporate transaction.

    Distribution and Marketing 
    Our lawyers have extensive experience with investment company and adviser advertising, marketing, and distribution matters. This experience includes matters involving principal underwriters (including statutory underwriter questions), broker-dealers and selling groups, and independent marketing organizations (IMOs). Our experience also includes handling the unique issues that arise when selling through the RIA channel. We guide clients through the FINRA advertising review process and advise on the regulatory requirements that apply to sales materials.

    Tax and ERISA 
    We counsel clients on the unique federal tax and ERISA issues that pertain to investment companies and advisers including advice regarding the IRS code requirements for favorable tax treatment as a regulated investment company. We also counsel advisers on any ERISA obligations they may have in connection with their activities with ERISA-covered plans, including ERISA’s fiduciary responsibility provisions.
     
  • Variable and Other Insurance Products
    We provide a full range of legal and regulatory services to insurance companies, broker-dealers and service providers relating to the design, marketing, and sale of variable insurance products, individual and group annuities, fixed indexed annuities, market-value-adjustment products, synthetic annuities, BOLI, funding agreements, stable value wrap contracts, and other innovative products. 

    Registration 
    Our lawyers have extensive experience with SEC registration of variable life insurance and variable annuity products under the Securities Act of 1933 (Securities Act) as well as SEC registration (and subsequent deregistration) of related separate accounts and investment companies under the Investment Company Act of 1940 (1940 Act). 

    Regulation 
    We advise on a variety of interpretive issues, including writing opinions that certain life insurance company products are not required to be registered under the Securities Act and that certain life insurance company accounts are not required to be registered under the 1940 Act. Our experience also includes drafting and reviewing applications for exemptions and requests for no-action relief, and advising on offerings made outside the United States. 

    Compliance 
    We assist with the preparation and review of variable and fixed annuity suitability programs, policies and procedures required under FINRA rules and state insurance law. Our lawyers have extensive experience drafting and reviewing compliance policies and procedures as well as advising on Sarbanes-Oxley Act compliance matters. 

    Transactions 
    Our lawyers have extensive experience working on a variety of transactions involving variable products, including separate account mergers, asset transfers, substitutions, redomestications, intact transfers of separate accounts, and liquidations.

    Distribution and Marketing 
    Our lawyers have extensive experience with variable product advertising, marketing, and distribution matters. This experience includes application of regulatory requirements to performance presentations, websites, and sales materials as we guide clients through the FINRA advertising review process. In addition to reviewing advertising and promotional material, we advise and assist in negotiating and documenting arrangements with distributors, joint venturers, and service providers.

    Tax, ERISA, and State Insurance Law 
    We advise on Federal Tax matters, ERISA, and state insurance law issues relating to insurance products. Our lawyers have extensive experience working with insurers to ensure product designs qualify for favorable tax treatment under federal tax laws. We also counsel clients on complex employee benefit plan issues, including an entity’s fiduciary status under ERISA and on obtaining advisory opinions and prohibited transaction exemptions from the Department of Labor.
     
  • Broker-Dealers

    We provide a full range of services to broker-dealers.

    Organization and Registration 
    We guide clients through broker-dealer formation and registration. We also advise on registered representative registration filings and related issues. 

    Compliance 
    We draft written supervisory procedures and other supervisory control policies and procedures. We also draft and advise on suitability policies and procedures. Our experience includes providing compliance and risk evaluation reviews. We also counsel clients on AML and OFAC compliance, books and records requirements, cash and non-cash compensation arrangements and fee referral issues, and email retention and production. 

    Regulation 
    We advise on broker-dealer reporting obligations and a variety of investment-related distribution issues. Our lawyers have extensive experience providing substantive reviews of advertising and sales literature for compliance with federal and state laws and regulations. Our experience also includes advising on matters relating to regulatory examinations and investigations. 

    Disputes and Arbitration 
    Our lawyers have extensive experience in customer complaint handling and FINRA arbitration. We also advise on registered representative termination filings and related issues and provide employee/registered representative dispute counseling.
     

  • Unclaimed Property

    We apply our unique focus to represent and counsel our insurance clients on a broad spectrum of unclaimed property matters, including: 

    • Strategies and responses to examinations by state insurance departments, state unclaimed property regulators, and auditing organizations acting on their behalf. 
    • Litigation brought against insurance companies by state agencies alleging violation of unclaimed property laws. 
    • Insurance company operational issues implicated by unclaimed property law compliance and remediation, including requirements to use the Social Security Death Master File (DMF) to identify policies and contracts subject to death claims. 
    • General compliance with unclaimed property requirements, including voluntary self-auditing and reporting. 
    • Compliance with unclaimed property requirements as they apply specifically to various types of insurance policies and annuity contracts and benefits thereunder, and to the amounts held in retained asset accounts. 
    • Reporting and compliance issues under state insurance law, such as responding to New York’s 2011 Section 308 letters. 
    • Securities law issues associated with unclaimed property compliance, including prospectus disclosure and operational considerations for variable products that may impact compliance with unclaimed property laws 
    • Reinsurance recovery of escheated benefit payments.

     

All Insights

NY DFS Delivers an Icy Blast to Insurers Using External Data Sources and Algorithmic Underwriting

NY DFS Delivers an Icy Blast to Insurers Using External Data Sources and Algorithmic Underwriting

January 29, 2019

On January 18, 2019, a wintry wind blew when the New York Department of Financial Services (NY DFS) released Circular Letter No. 1 (2019) ("Letter No. 1") "to advise insurers authorized to write life insurance in New York of their statutory obligations regarding the use of external consumer data and information sources in underwriting for life insurance."

Challenging New York’s “Best Interest” Standard: A Comparison to COCUS

Challenging New York’s “Best Interest” Standard: A Comparison to COCUS

December 18, 2018

Recent challenges filed by trade associations representing insurance agents in the state of New York seek to overturn the amendment of Regulation 187, which will impose a “best interest” standard on life insurance agents in the offering and sale of annuities and life insurance in New York.

Court Upholds California Department of Insurance’s Expansive Interpretation of Claims Practices Statute

Court Upholds California Department of Insurance’s Expansive Interpretation of Claims Practices Statute

December 18, 2018

A California appellate court recently reversed the trial court’s decision to enjoin the California Insurance Commissioner from enforcing certain regulations regarding unfair claim settlement practices.

Defendants Not Liable for Insurance Agent’s Ponzi Scheme

Defendants Not Liable for Insurance Agent’s Ponzi Scheme

December 18, 2018

A California appellate court recently affirmed the dismissal of claims against multiple insurers made by victims of a Ponzi scheme that was orchestrated by an independent insurance agent.

Life Insurer’s Early Dispositive Motion Achieves Narrowed Fraud Claim in COI Suit

Life Insurer’s Early Dispositive Motion Achieves Narrowed Fraud Claim in COI Suit

December 18, 2018

A recent decision by a federal district court in Maryland further illustrates the elusive nature of early dismissal of claims in far-reaching suits challenging the cost of insurance rate increases – even when some success is achieved via the rejection of underlying theories of liability.

Class Certification Denied in Suitability Class Action

Class Certification Denied in Suitability Class Action

December 18, 2018

The Southern District of New York recently declined to certify a class in a suit relating to investments in certain closed-end mutual funds, holding that individual questions overwhelmed the class-wide questions in contravention of the typicality and predominance requirements of Federal Rule of Civil Procedure 23.

Sixth Circuit Holds Employer Has No Duty to Notify of Conversion Options

Sixth Circuit Holds Employer Has No Duty to Notify of Conversion Options

December 18, 2018

The Sixth Circuit recently held that an employer had no duty to notify employees of conversion options in group life insurance policies.

SEC Proposes Summary Prospectus Option and Modernized Disclosure for Variable Insurance Products

SEC Proposes Summary Prospectus Option and Modernized Disclosure for Variable Insurance Products

December 18, 2018

On October 30, the SEC voted to propose modernized disclosures for variable annuities and variable life insurance policies.

How State and Federal Laws Are Addressing the Use of Direct-to-Consumer Genetic Testing by Insurance Companies

How State and Federal Laws Are Addressing the Use of Direct-to-Consumer Genetic Testing by Insurance Companies

December 18, 2018

While life insurers traditionally have set premiums based on a multitude of complex actuarial tables, the recent boom in direct-to-consumer DNA testing produces, such as 23andMe and AncestryDNA, is expanding the universe of genetic information available about consumers for consideration in rate-setting and other underwriting and policy operations.

New Jersey Fiduciary Rule Pre-Proposal

New Jersey Fiduciary Rule Pre-Proposal

December 18, 2018

On October 15, the New Jersey Bureau of Securities (Bureau) requested public comments on the concept of amending the New Jersey Blue Sky regulations “to require that broker-dealers, agents, investment advisers, and adviser representatives be subject to a fiduciary duty.”

Use of Non-Binding SEC Staff Guidance Called Into Question

Use of Non-Binding SEC Staff Guidance Called Into Question

December 18, 2018

Recent moves by the SEC could signal a shift away from the use of non-binding guidance in the form of no-action letters or other types of compliance and interpretive information that the SEC staff frequently publishes.

Is It Time to Revisit SEC’s Ban on “Forced” Arbitration Provisions?

Is It Time to Revisit SEC’s Ban on “Forced” Arbitration Provisions?

December 18, 2018

The SEC has long refused to allow companies to go public with bylaws or other governing documents that would require shareholders to arbitrate federal securities law claims against the company.

Various NAIC Groups Discuss a Cornucopia of Life and Annuity Topics

Various NAIC Groups Discuss a Cornucopia of Life and Annuity Topics

December 18, 2018

At the NAIC Fall 2018 National Meeting, various groups within the NAIC discussed a cornucopia of topics that impact the life and annuity industry.

SEC Lightens Legal Load of Mutual Fund Directors

SEC Lightens Legal Load of Mutual Fund Directors

December 18, 2018

The SEC staff now says that mutual fund directors can rely on chief compliance officer certifications in determining compliance with board procedures required by SEC exemptive Rules 10f-3, 17a-7, and 17e-1 under the Investment Company Act.

Parent Company Guarantees of Annuities

Parent Company Guarantees of Annuities

December 18, 2018

Rule amendments proposed in October by the SEC could impact insurers whose obligations under certain types of annuity contracts have been guaranteed by the insurers’ affiliates.

Buffer ETFs vs. Index-Linked Annuities

Buffer ETFs vs. Index-Linked Annuities

December 18, 2018

A new form of “buffer” ETF is competing with somewhat similar products – often referred as index-linked or “buffer annuities” – issued by insurance companies. Innovator Capital Management, LLC serves as the investment adviser for a suite of buffer ETFs.

Executive Compensation Disclosure – Partial Relief for Insurance Products

Executive Compensation Disclosure – Partial Relief for Insurance Products

December 18, 2018

For many years, insurance company issuers of non-variable products that are registered with the SEC on Forms S-1 or S-3 have been required to disclose compensation information about highly-compensated executive officers of the issuer.

Is It Time to Harvest the NAIC Suitability in Annuity Transactions Model Regulation?

Is It Time to Harvest the NAIC Suitability in Annuity Transactions Model Regulation?

November 26, 2018

At the NAIC Fall 2018 National Meeting, state regulators continued plowing through the Suitability in Annuity Transactions Model Regulation (Model 275) (Suitability Model).

Suitability Working Group Stirs Ingredients for Suitability Model Potion

Suitability Working Group Stirs Ingredients for Suitability Model Potion

October 25, 2018

On October 22 and 23, the NAIC Annuity Suitability (A) Working Group (Suitability WG) held an interim meeting to review comments received on the Suitability in Annuity Transactions Model Regulation (Model 275) (Suitability Model).

As Students Return to School, Regulators Continue Their Study of the NAIC’s Suitability in Annuity Transaction Model Regulation

As Students Return to School, Regulators Continue Their Study of the NAIC’s Suitability in Annuity Transaction Model Regulation

October 1, 2018

At the 2018 NAIC Summer National Meeting, regulators continued their efforts to define the standard of care that applies to recommendations.

Court Invalidates California Unclaimed Property Law Regulations

Court Invalidates California Unclaimed Property Law Regulations

October 1, 2018

A California state court recently enjoined the state from enforcing two rules adopted by the Office of the State Controller without compliance with the California Administrative Procedure Act (APA) concerning the state’s Unclaimed Property Law (UPL).

Dodd-Frank Rollback Benefits Insurers

Dodd-Frank Rollback Benefits Insurers

October 1, 2018

The Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law 115-174 or the Act) was signed into law on May 24. The Act can benefit life insurance companies or their affiliates in a number of ways.

Even Disclaiming ‘Magic Words’ Won’t Save Plaintiffs from SLUSA Preclusion

Even Disclaiming ‘Magic Words’ Won’t Save Plaintiffs from SLUSA Preclusion

October 1, 2018

In 2016, a putative class action lawsuit was filed in California state court on behalf of all persons over the age of 60 who were issued a variable annuity policy by defendants within the state.

FINRA Targets Variable Annuity Practices

FINRA Targets Variable Annuity Practices

October 1, 2018

FINRA’s reported enforcement actions as to certain variable annuity practices increased in 2018.

In California, a New Era in U.S. Privacy

In California, a New Era in U.S. Privacy

October 1, 2018

In June, California passed a sweeping new privacy law that will impact an estimated 500,000 businesses in the United States.

Louisiana Appeals Court Affirms Class Certification in Lingering Litigation Against Department of Insurance

Louisiana Appeals Court Affirms Class Certification in Lingering Litigation Against Department of Insurance

October 1, 2018

A Louisiana appeals court recently affirmed class certification in consolidated lawsuits, pending since 1991, against Louisiana’s Department of Insurance, other related state entities, and the state’s excess insurance carriers.

NAIC Summer National Meeting Spotlights Innovation and Insurtech

NAIC Summer National Meeting Spotlights Innovation and Insurtech

October 1, 2018

In response to the accelerating pace of change, the NAIC’s Summer National Meeting in Boston focused on innovation and insurtech.

NIST Provides Guide and Example Solution for IT Asset Management

NIST Provides Guide and Example Solution for IT Asset Management

October 1, 2018

On September 7, the National Cybersecurity Center of Excellence (NCCoE) and the National Institute of Standards and Technology (NIST) published Special Publication 1800-5 – IT Asset Management Practice Guide (the Guide) to help financial services companies tackle challenges in managing both the hardware and software components of their information technology assets.

Protecting At-Risk Seniors from Financial Exploitation

Protecting At-Risk Seniors from Financial Exploitation

October 1, 2018

Financial exploitation of senior citizens and other vulnerable adults results in substantial losses each year. This article discusses two of the many recent legislative and regulatory actions targeting this abuse.

SEC ‘Investor Experience Initiative’ Expressly Includes Variable Insurance Products

SEC ‘Investor Experience Initiative’ Expressly Includes Variable Insurance Products

October 1, 2018

The SEC, on June 5, announced that it would be exploring “modernization of the design, delivery and content of fund disclosures” in order “to improve the investor experience and help investors make more informed investment decisions.”

SEC Proceedings Face Uncertainty After Supreme Court Holds ALJs Unconstitutional

SEC Proceedings Face Uncertainty After Supreme Court Holds ALJs Unconstitutional

October 1, 2018

After much anticipation, the U.S. Supreme Court ruled on the constitutionality of the Securities and Exchange Commission’s (SEC or Commission) Administrative Law Judges (ALJs). In Lucia v. SEC, Dkt. No. 17–130, the Supreme Court held that ALJs are “Officers of the United States” subject to the Appointments Clause of the U.S. Constitution, rather than mere federal employees.

SEC Proposes New Rule Impacting ETFs

SEC Proposes New Rule Impacting ETFs

October 1, 2018

On June 28, the SEC proposed new rule 6c-11 to allow open-end exchange-traded funds that satisfy certain conditions to operate without obtaining an SEC exemptive order.

SEC: Ether and Bitcoin Are Not Securities

SEC: Ether and Bitcoin Are Not Securities

October 1, 2018

Cryptocurrency investors were concerned following the SEC’s July 2017 investigative report on digital token sales by a virtual organization known as “The DAO.”

Second Circuit Affirms Summary Judgment for Bona Fide Purchaser in STOLI Action

Second Circuit Affirms Summary Judgment for Bona Fide Purchaser in STOLI Action

October 1, 2018

In a June 8, ruling in AEI Life v. Lincoln Benefit Life Co., the Second Circuit upheld the District Court for the Eastern District of New York’s application of New York’s two-year incontestability period to a STOLI policy.

XBRL Amendments Have Limited Impact on Insurance Products

XBRL Amendments Have Limited Impact on Insurance Products

October 1, 2018

On June 28, the SEC amended existing requirements for public operating companies and mutual funds regarding the use of eXtensible Business Reporting Language (XBRL) for financial statement information and risk/return summaries.

SEC Regulation Best Interest: Charting a Course for Securities and Annuity Sales

SEC Regulation Best Interest: Charting a Course for Securities and Annuity Sales

September 5, 2018

In June, we circulated our fifth article on the continuing saga regarding the standard of conduct for sales of securities and annuities — and the efforts of federal and state regulators to impose new conditions on the existing standards. Our earlier articles focused on the potential for regulatory and litigation issues arising under the Department of Labor’s fiduciary rule adopted in 2016, which was struck down by the Fifth Circuit Court of Appeals.

Although Largely Deflated, IUL Illustration Statute Lawsuit Rolls On

Although Largely Deflated, IUL Illustration Statute Lawsuit Rolls On

July 27, 2018

Almost a year ago, the U.S. Court of Appeals for the Ninth Circuit ruled that an alleged violation of California’s illustration statutes could serve as a predicate for liability under the California Unfair Competition Law.

In the Duty of Care Race, the NAIC Is in the Chase with New Proposed Revisions to Its Annuity Suitability Model

In the Duty of Care Race, the NAIC Is in the Chase with New Proposed Revisions to Its Annuity Suitability Model

July 27, 2018

On July 24, in preparation for its August 4 meeting at the NAIC 2018 Summer National Meeting, the Annuity Suitability (A) Working Group released a working draft of proposed revisions to the Suitability in Annuity Transactions Model Regulation (#275). This alert discusses the significant proposed changes, comments, and suggestions for discussion at the Summer National Meeting.

COI Litigation Update

COI Litigation Update

June 25, 2018

Life insurers that defend challenges to their exercises of discretion to adjust cost of insurance (COI) rates on universal life insurance policies continue to seek opportunities to narrow the scope of the claims through early dispositive motions.

FINRA Moves Toward SEC Anti-Churning Proposal

FINRA Moves Toward SEC Anti-Churning Proposal

June 25, 2018

On April 18, the SEC voted to propose major rule changes to reconcile and clarify the standards of conduct that apply to broker-dealers and investment advisers.

FINRA Proposes to Ease Regulation of Outside Business Activities

FINRA Proposes to Ease Regulation of Outside Business Activities

June 25, 2018

FINRA has proposed a major paradigm shift for regulating outside business activities (OBAs) and private securities transactions (PSTs) of broker-dealer personnel.

New York Pushes Mutual Fund Active Share Disclosure

New York Pushes Mutual Fund Active Share Disclosure

June 25, 2018

New York’s Attorney General issued a report on its recent investigation of fees charged by actively managed equity mutual funds and a metric known as "Active Share."

Ninth Circuit: Face Amount Controls Amount-in-Controversy Questions Where Policy’s Validity is Disputed

Ninth Circuit: Face Amount Controls Amount-in-Controversy Questions Where Policy’s Validity is Disputed

June 25, 2018

In March, the Ninth Circuit provided clarity on a key and recurring issue relevant to a district court’s ability to exercise subject matter jurisdiction in actions involving the validity of life insurance policies.

Recalls of Loaned Securities by Insurance Dedicated Funds

Recalls of Loaned Securities by Insurance Dedicated Funds

June 25, 2018

In March, the SEC sanctioned the investment advisers of two funds supporting variable insurance contracts for inadequate disclosure about the funds’ recalls of loaned portfolio securities in advance of the securities’ dividend record dates.

SEC Warns About Third-Party Destruction of Broker-Dealer Records

SEC Warns About Third-Party Destruction of Broker-Dealer Records

June 25, 2018

The SEC staff issued an April 12 letter addressing broker-dealer contracts with third-party recordkeeping service providers under which the service provider can delete or discard records of a broker-dealer who fails to pay fees due under the recordkeeping agreement, among other scenarios.

Supreme Court Set to Rule on Constitutionality of SEC’s ALJs

Supreme Court Set to Rule on Constitutionality of SEC’s ALJs

June 25, 2018

In April, the U.S. Supreme Court heard oral argument in Lucia v. SEC to resolve the federal circuit court split on whether the SEC’s administrative law judges (ALJs) are "inferior officers" of the United States who must be appointed in accordance with the Appointments Clause of the U.S. Constitution, and not mere employees whose hiring is not required to meet constitutional standards.

To Preempt or Not to Preempt - Courts Issue Competing SLUSA Rulings

To Preempt or Not to Preempt - Courts Issue Competing SLUSA Rulings

June 25, 2018

During two weeks in April, two different courts — the Second Circuit and the New Jersey Superior Court — considered nearly identical allegations regarding variable products and reached diametrically opposed conclusions about the extent to which the claims were barred by the Securities Litigation Uniform Standard Act (SLUSA).

Unclaimed Life Insurance Benefits: The First Half of 2018 in Review

Unclaimed Life Insurance Benefits: The First Half of 2018 in Review

June 25, 2018

The pace of developments in the unclaimed life insurance benefits space remained active in the first six months of 2018, with new judicial decisions and state legislative enactments making an impact.

Which Thoroughbred Will Win the Standards of Care Derby?

Which Thoroughbred Will Win the Standards of Care Derby?

June 25, 2018

The NAIC and the State of New York continue racing as each is revising its suitability regulation to incorporate enhanced standards of care. Only time will tell which version will gallop to victory.

Win for MassMutual in Rare Class Action Trial

Win for MassMutual in Rare Class Action Trial

June 25, 2018

A California jury recently returned a verdict in favor of MassMutual following a 12-day trial in a state-court class action that claimed the insurer failed to pay dividends owed to policy owners.

Expect Slower SEC Processing of Investment Company Filings

Expect Slower SEC Processing of Investment Company Filings

June 24, 2018

The SEC has reported to Congress that it expects the Division of Investment Management (IM) to provide comments at a slower pace during the 2018 and 2019 fiscal years.

South Carolina First State to Adopt NAIC Insurance Data Security Model Law

South Carolina First State to Adopt NAIC Insurance Data Security Model Law

June 24, 2018

On May 3, Governor Henry McMaster signed the South Carolina Insurance Data Security Act, making South Carolina the first state to adopt the NAIC Insurance Data Security Model Law.

SEC Regulation Best Interest: Charting a Course for Securities and Annuity Sales, Avoiding Collision and Potential Regulatory and Litigation Issues

SEC Regulation Best Interest: Charting a Course for Securities and Annuity Sales, Avoiding Collision and Potential Regulatory and Litigation Issues

June 12, 2018

During the past two years, we have written about potential litigation arising under the Department of Labor’s, first proposed, then adopted fiduciary rule. This article is the first of several we will write on the potential impact of these events on the recommendation and sale of securities generally, with particular emphasis on insurance company annuities.

Several Teams Compete to Reach NAIC Suitability Model Finals

Several Teams Compete to Reach NAIC Suitability Model Finals

June 5, 2018

Several teams competed over proposed revisions to the Suitability in Annuity Transactions Model Regulation (#275) at the in-person meeting of the NAIC Annuity Suitability Working Group.

Almost There!  South Carolina on Course to Become First State to Adopt NAIC Insurance Data Security Model Law

Almost There! South Carolina on Course to Become First State to Adopt NAIC Insurance Data Security Model Law

May 2, 2018

South Carolina’s law is substantially similar to the NAIC Model, and would take effect January 1, 2019.

Changes to New York Insurance Regulation 187: Are They April Showers Bringing May Flowers, or Are June Bugs on the Way?

Changes to New York Insurance Regulation 187: Are They April Showers Bringing May Flowers, or Are June Bugs on the Way?

April 30, 2018

If issued, the updated proposed first amendment will take effect on March 1, 2019.

SEC Proposes New Standards of Conduct for Broker-Dealers and Investment Advisers

SEC Proposes New Standards of Conduct for Broker-Dealers and Investment Advisers

April 19, 2018

On April 18, the SEC voted four to one to propose new standards of conduct for broker-dealers (BDs) and investment advisers (IAs).

An Illustration Saga Continues in California

An Illustration Saga Continues in California

March 31, 2018

As we previously reported, the Ninth Circuit in March 2017 held that violation of California’s illustration statutes could serve as a predicate for an Unfair Competition Law (UCL) action, partially reversing the trial court’s decision in Walker v. Life Ins. Co. of the Southwest on the plaintiff’s UCL claims following a jury verdict for the insurer.

Another Bout in the NAIC Best Interest Standard Title Fight

Another Bout in the NAIC Best Interest Standard Title Fight

March 31, 2018

In response to the National Association of Insurance Commissioners’ (NAIC) Annuity Suitability Working Group’s (Suitability WG) proposed revisions to the "Suitability and Best Interest Standard of Conduct in Annuity Transactions Model Regulation" (Model), 23 comment letters were submitted by regulators, consumer groups, industry groups, and companies (the Contenders).

CAFA’s Local Controversy Exception Requires Class Claims Against Local Defendant

CAFA’s Local Controversy Exception Requires Class Claims Against Local Defendant

March 31, 2018

As we previously reported, in September 2017, a federal district court in Louisiana dismissed with prejudice as time-barred putative class action RICO and state racketeering claims related to alleged wrongful conduct by an agent in connection with annuities issued by Sun Life.

Court Rejects Insurer’s Spokeo-Based  Standing Challenge to TCPA Action

Court Rejects Insurer’s Spokeo-Based Standing Challenge to TCPA Action

March 31, 2018

In a February 20 ruling, the Northern District of Illinois cleared the way for a plumbing company’s putative class action against Allstate Insurance Company and an insurance agency co-defendant by denying the defendants’ motions to dismiss, which were inspired by recent U.S. Supreme Court decisions, including Spokeo v. Robins in 2016.

Enforcement of DOL’s New Best Interest Contract Exemption’s Anti-Arbitration Condition is Enjoined

Enforcement of DOL’s New Best Interest Contract Exemption’s Anti-Arbitration Condition is Enjoined

March 31, 2018

A number of lawsuits have been brought challenging aspects of the United States Department of Labor’s "fiduciary rule," which expanded the definition of "fiduciary" of an employee benefit plan or individual retirement account as a result of giving investment advice for compensation to retirement investors.

Fifth Circuit Vacates DOL Fiduciary Rule

Fifth Circuit Vacates DOL Fiduciary Rule

March 31, 2018

On March 15, the Fifth Circuit, in Chamber of Commerce, et. al. v. United States Department of Labor, a 46-page opinion, reversed the district court’s ruling upholding the Department of Labor (DOL) fiduciary rule and vacated the rule.

FINRA Requires Order Taker Registration

FINRA Requires Order Taker Registration

March 31, 2018

In late 2017, FINRA pronounced in Regulatory Notice 17-30 that, "Beginning on October 1, 2018, unregistered persons cannot accept an order from a customer under any circumstances.

Illinois Federal Court Rejects Twin Suits Challenging Dividend Payment Practices

Illinois Federal Court Rejects Twin Suits Challenging Dividend Payment Practices

March 31, 2018

Challenges to mutual life insurers’ discretion in setting dividend scales date back over 100 years. Earlier this year, in Anderson v. Country Life Insurance Company and Ochoa v. State Farm Life Insurance Company, a federal court in Illinois dismissed twin putative class action lawsuits filed against a pair of insurers.

Implementation Delay and Q&As for Fund Liquidity Rule

Implementation Delay and Q&As for Fund Liquidity Rule

March 31, 2018

On February 21, the SEC approved a six-month extension for mutual funds to comply with the classification (bucketing) requirements and related elements of its new liquidity rule.

Insurers Keep Providing Corporate Governance Disclosures Without Complaint—Yet

Insurers Keep Providing Corporate Governance Disclosures Without Complaint—Yet

March 31, 2018

Following the financial crisis, the NAIC undertook a solvency modernization initiative (SMI) to update insurance regulators on insurance companies’ regulatory frameworks.

Investment Adviser Fee Table on the Table

Investment Adviser Fee Table on the Table

March 31, 2018

On February 7, the Massachusetts Securities Division asked for public comment on a fee table requirement for Massachusetts-registered investment advisers.

NAIC Disclosure Developments

NAIC Disclosure Developments

March 31, 2018

Annuity Illustration Standard Changes: On March 2, the Annuity Disclosure (A) Working Group of the National Association of Insurance Commissioners agreed to recommend the adoption of a revision to the NAIC’s Annuity Disclosure Model Regulation illustration standards.

Nonpayment of an Insurance Claim is Not Elder Abuse

Nonpayment of an Insurance Claim is Not Elder Abuse

March 31, 2018

Does the failure to pay an insurance claim constitute elder abuse?

Plaintiffs’ Notice That the ‘Taxman Cometh’ Was Sufficient to Trigger Statute of Limitations

Plaintiffs’ Notice That the ‘Taxman Cometh’ Was Sufficient to Trigger Statute of Limitations

March 31, 2018

In a November 16, 2017 ruling, a California appellate court affirmed a summary judgment ruling in favor of several financial advisors, and insurer American General Life Insurance Company, holding that plaintiffs’ fraud and negligence based claims relating to alleged faulty financial planning advice were time-barred.

SDNY Ruling Narrows Claims in COI Suit

SDNY Ruling Narrows Claims in COI Suit

March 31, 2018

In EFG Bank AG, Cayman Branch v. AXA and The Duffy 2004 LLC v. AXA, in a February 14 ruling, AXA Equitable Life Insurance Company earned a sweet victory on its motion for partial dismissal of the complaints in two consolidated proceedings actions challenging its COI rate increases.

SEC Issues Cybersecurity Disclosure Guidance

SEC Issues Cybersecurity Disclosure Guidance

March 31, 2018

On February 21, the SEC published interpretive "Guidance" to help public operating companies prepare disclosures about cybersecurity risks and incidents.

SEC Sidelines Funds Focused on Cryptocurrencies

SEC Sidelines Funds Focused on Cryptocurrencies

March 31, 2018

In a January 18 letter to two of the fund industry’s leading advocacy groups, the staff of the SEC’s Division of Investment Management advised fund sponsors not to initiate registration of funds that intend to invest substantially in cryptocurrency and related products until the staff’s questions, which the letter identified, are satisfactorily addressed.

State Suitability, Fiduciary Duty and Disclosure Initiatives Roundup

State Suitability, Fiduciary Duty and Disclosure Initiatives Roundup

March 31, 2018

States are stampeding to impose additional duties on those who provide financial advice or make recommendations to consumers.

Supreme Court Denies Insurer’s Petition to Review Standing in Data Breach Class Actions

Supreme Court Denies Insurer’s Petition to Review Standing in Data Breach Class Actions

March 31, 2018

In recent years, the insurance and financial services industries have been targets of high profile data breaches.

When Innovation Meets Regulation: InsurTech and State Licensing Laws

When Innovation Meets Regulation: InsurTech and State Licensing Laws

March 31, 2018

The rise of InsurTech — which brings technological innovations to the business of insurance — is having a significant impact on the insurance industry, including through advancements in cybersecurity tools, the introduction of blockchain, and the use of big data for underwriting and claims.

SEC Targets Variable Insurance Products

SEC Targets Variable Insurance Products

March 30, 2018

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

New York Department of Financial Services Rings in the New Year with New Suitability Requirements for Insurance Companies

New York Department of Financial Services Rings in the New Year with New Suitability Requirements for Insurance Companies

January 1, 2018

New York’s Department of Financial Services (NY DFS) decided to bid farewell to 2017 and ring-in the new year by proposing to amend Suitability in Annuity Transactions, 11 NYCR 224 (the Annuity Suitability Rule).

Based on Principles of Fairness, Court Dismisses Putative Class Action RICO Claims Asserted Years After Initiation of Suit

Based on Principles of Fairness, Court Dismisses Putative Class Action RICO Claims Asserted Years After Initiation of Suit

December 29, 2017

In Robertson v. SunLife Financial, a federal district court in Louisiana dismissed with prejudice as time-barred an amended putative class action complaint alleging RICO and state racketeering claims related to alleged wrongful conduct by an agent related to annuities issued by SunLife.

COI Litigation Review – Early Dismissals Remain Elusive in Rate Increase Actions

COI Litigation Review – Early Dismissals Remain Elusive in Rate Increase Actions

December 29, 2017

Suits challenging insurers’ cost of insurance (COI) rate increases continue to generate much activity. In recent months, this activity has included transfers, consolidations, several actions that are inching closer to trial-readiness, and even a plaintiff’s jury verdict in an individual action.

Delicate FINRA Balancing Act: To Self-Report or Not?

Delicate FINRA Balancing Act: To Self-Report or Not?

December 29, 2017

FINRA Rule 4530(a) requires member firms to promptly report certain enumerated events. Rule 4530(b) is less specific, with supplemental guidance advising that a firm should report when it concludes or reasonably should have concluded that conduct or events will result in "widespread or potential widespread impact to the member,

Denial of Reinstatement of Lapsed Life Insurance Policy Affirmed Due to Failure to Satisfy Required Underwriting Standard

Denial of Reinstatement of Lapsed Life Insurance Policy Affirmed Due to Failure to Satisfy Required Underwriting Standard

December 29, 2017

In European Pensions Management Limited v. Columbus Life Insurance Co., a pension benefit plan that had purchased a life insurance policy on the secondary market and then permitted it to lapse for non-payment of premiums sued the insurer Columbus Life, alleging breach of contract and bad faith.

Did Santa Give the Insurance Industry a Lump of Coal or a Diamond in the Rough?

Did Santa Give the Insurance Industry a Lump of Coal or a Diamond in the Rough?

December 29, 2017

The Proposed Suitability and Best Interest Standard of Conduct in Annuity Transactions Model Regulation

Preparing for New York Regulation 210’s Effective Date

Preparing for New York Regulation 210’s Effective Date

December 29, 2017

The Preamble to New York’s Regulation 210 (the "Regulation") contains a March 19, 2018 effective date.

Regulators Continue to Scrutinize Initial Coin Offerings

Regulators Continue to Scrutinize Initial Coin Offerings

December 29, 2017

As reported in the most recent issue of Expect Focus, the SEC issued an investigative report in July cautioning market participants that distributed ledger (blockchain) technology-based offers and sales of digital "tokens" or "coins" in a so-called initial coin offering (ICO) may be subject to federal securities laws, depending on the circumstances.

SEC Committee Advocates for Summary Mutual Fund Shareholder Reports

SEC Committee Advocates for Summary Mutual Fund Shareholder Reports

December 29, 2017

On December 7, the Investor Advisory Committee of the Securities and Exchange Commission (SEC) adopted a recommendation that the SEC seriously explore the development of a summary disclosure document for mutual fund companies to use to satisfy their shareholder report delivery requirements.

SEC Exam Staff: “Surprise, We’re Back”

SEC Exam Staff: “Surprise, We’re Back”

December 29, 2017

In August, Kevin Kelcourse, the associate director for examinations at the SEC’s Boston Regional Office, confirmed that his office has been making "surprise" examination visits to registered advisers in the region.

SEC Whistleblower Awards to Insurance Department Employees?

SEC Whistleblower Awards to Insurance Department Employees?

December 29, 2017

Many federal, state, and local governmental employees may be eligible for awards pursuant to the SEC’s whistleblower program under the Dodd-Frank Act.

The Continuing Representation Doctrine Does Not Apply to Fraud Allegations

The Continuing Representation Doctrine Does Not Apply to Fraud Allegations

December 29, 2017

In Messmer v. KDK Fin. Serv. Inc., an individual action involving alleged fraud in connection with the sale and surrender of deferred annuities to a senior, the Indiana Court of Appeals refused to extend the doctrine of continuous representation to cases involving fraud and brokers of financial services.

The Ghosts of Christmas Past, Present, and Future Haunt Insurers’ Use of Big Data and Algorithmic Tools

The Ghosts of Christmas Past, Present, and Future Haunt Insurers’ Use of Big Data and Algorithmic Tools

December 29, 2017

Watching as legislators, regulators, and policymakers’ consider what changes, if any, are necessary for insurers’ use of big data and algorithmic tools, is like being visited by the Ghosts of Christmas Past, Present, and Future.

The Impact of the EU Requirement to ‘Unbundle’ Research Costs

The Impact of the EU Requirement to ‘Unbundle’ Research Costs

December 29, 2017

A recent European Union (EU) directive prohibits certain investment managers from receiving securities research whose cost is "bundled" together with broker-dealers’ costs of effecting securities transactions directed by the investment managers.

The NAIC Says Aloha

The NAIC Says Aloha

December 29, 2017

The National Association of Insurance Commissioners held its Fall National Meeting December 2-4 in Hawaii, saying aloha to 2017 and aloha to 2018.

Third Time Is the Charm: Class Certified in DMF-Related Shareholder Suit

Third Time Is the Charm: Class Certified in DMF-Related Shareholder Suit

December 29, 2017

In City of Westland Police & Fire Retirement System v. MetLife, the plaintiffs allege that the insurer overstated its earnings because it did not hold sufficient reserves for death benefit claims on group life insurance policies that were incurred but not reported.

When Innovation Meets Regulation

When Innovation Meets Regulation

December 29, 2017

The rise of InsurTech — which brings technological innovations to the business of insurance — has recently had a significant impact on the insurance industry, including through advancements in cybersecurity tools, the introduction of blockchain, and the use of big data for underwriting and claims.

Treasury Department Urges SEC to Act on Life Company Products

Treasury Department Urges SEC to Act on Life Company Products

December 28, 2017

The U.S. Department of the Treasury published an October 2017 report, "A Financial System That Creates Economic Opportunities — Asset Management and Insurance" in response to President Trump’s Executive Order 13772 on "Core Principles for Regulating the United States Financial System."

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation Q&A #4

The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions & Potential Litigation Q&A #4

December 4, 2017

This article continues the discussion of potential litigation issues under the “revised temporary” DOL Rule involving the offer and sale of annuities in the IRA market.

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Beth A. Vecchioli

Beth A. Vecchioli

Senior Director Government Consulting

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