SEC Announces Key Changes for Index-Linked Annuities

YEREVAN (CoinChapter.com) — July 1, 2024 – The Securities and Exchange Commission (SEC) has announced key amendments to Form N-4, improving disclosure for registered index-linked annuities (RILAs) and market-value adjustment annuities (MVAs). These updates aim to provide investors with the most relevant information.

SEC Tailors Disclosure Requirements for RILA and MVA Investors

The SEC has addressed the specific disclosure needs of RILA and MVA purchasers. Previously, these products used Form S-1, which was not designed for their unique features. Form S-1 required extensive details about the issuing company, such as executive compensation and financial statements, which might not be directly relevant to annuity buyers.

The amendments to Form N-4 now allow for more focused disclosures about the products. This includes details on features, risks, and expenses, which are crucial for investors.

SEC RILA Re-Form Announcement. Source: @RegFlowHub SEC Implements RILA Act Changes with New Disclosure and Filing Fee Adjustments

The Registered Index-Linked Annuities Act of 2022 (RILA Act) prompted these updates. Although the SEC missed the 18-month statutory deadline, these changes have now been implemented. Key modifications include the introduction of optional summary prospectuses, which make information more accessible to investors.

Additionally, the amendments adjust how filing fees are calculated and permit the use of “free writing” prospectuses under specific conditions. This flexibility helps issuers communicate more effectively with potential investors.

SEC Enhances Disclosure Rules and Updates Form 24F-2

Commissioner Mark T. Uyeda emphasized the importance of these changes. He noted that the goal is to provide material and informative disclosures while eliminating irrelevant details that could distract investors.

“These amendments ensure that investors get the critical information they need,”

said Uyeda. He highlighted the efforts of various SEC staff divisions and the Office of the Investor Advocate in shaping these amendments through investor testing.

The SEC also made technical amendments to Form 24F-2. This form now permits investment companies, including non-variable annuities, to pay registration fees for an indefinite number of securities. The amendments remove outdated instructions, some dating back to 1995, ensuring the form is current.

SEC Enhances RILA and MVA Disclosures. Source: SEC Statement Commissioner Uyeda Advocates for Tailored Crypto Asset Disclosure Rules

Commissioner Uyeda suggested a similar tailored approach for crypto digital assets. Currently, Form S-1’s requirements may not align with the unique characteristics of these assets, potentially affecting capital formation and investor protection.

SEC Calls for Crypto Disclosure Reform. Source: @AlexanderGrieve

He argued that allowing variances from Form S-1 for crypto assets, similar to those for fund and insurance products, could result in more relevant and material disclosures. This approach could benefit both issuers and investors in the crypto space.

SEC Advocates for Crypto Disclosure Flexibility. Source: SEC Statement

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