Alert February 05, 2008

SEC Approves FINRA Proposal to Delay Effective Date for Principal Review and Approval Provisions of New Variable Annuity Sales Rule

The SEC approved FINRA’s proposal to delay from May 5, 2008 until August 4, 2008 the effective date of paragraph (c) of Rule 2821, which addresses principal review and approval of sales and exchanges of deferred variable annuities.  (New Rule 2821’s requirements were summarized in the September 18, 2007 Alert.)  In response to industry comment,  FINRA’s staff has indicated that it intends to give further consideration to paragraph (c) of Rule 2821 and related interpretive statements in Regulatory Notice 07-52, which announced SEC approval of the rule, to determine whether certain unintended and harmful consequences might ensue if the rule went into effect as originally planned.  If, based on this review, FINRA concludes that further rulemaking is warranted, it will file a separate rule change with the SEC.