The question is this: Is an indexed annuity an “investment plan” or not?
That question was answered recently in Illinois, where that state’s Securities Department clarified the uncertainty over whether IAs might be considered “investment plans” and subject to state securities laws.
The department recently clarified its position on this issue, stating that IAs and the advisors who sell them are not subject to securities registration under Illinois law. The uncertainty arose following an enforcement action taken by the department, in which a department order implied that IA’s might be considered “investment plans” and therefore subject to Illinois securities laws.
Earlier this month, the department issued a no-action statement to Fidelity & Guaranty Life. In that statement, the department says it will not recommend enforcement action against Fidelity & Guaranty or its agents for offering and selling IAs without registering the product as a security or registering the agents as securities salespersons.
This no-action statement was issued on the condition that Fidelity & Guaranty is licensed to sell insurance in Illinois, that the IAs are issued and guaranteed by the company, that the IAs are approved for sale in Illinois, and that the company’s agents are licensed by the Illinois Insurance Department.