The SEC approved changes proposed by the Financial Industry Regulatory Authority (“FINRA”) to NASD Rule 2821, which establishes suitability, supervisory and training requirements for sales and exchanges of deferred variable annuities. The proposed amendments were covered in the June 10, 2008 Alert. The amendments: (1) limit the rule to recommended transactions; (2) modify the timing for the principal review requirement to begin on the date when the broker-dealer’s office of supervisory jurisdiction receives a complete and correct copy of the variable annuity application; and (3) revise the rule’s supplementary guidance to permit broker-dealers to forward funds to insurance companies prior to completion of the principal review under certain circumstances. The effective date of the rule will be delayed by 240 days following the publication of FINRA’s regulatory notice announcing SEC approval.
Alert April 28, 2009