NAFA, the National Association for Fixed Annuities, has recently taken a strong stance in support of the Defendants’ Motion to Dismiss in the Securities and Exchange Commission v. Cutter Financial Group, LLC and Jeffrey Cutter lawsuit currently before the U.S. District Court for the District of Massachusetts.
In a bold move, NAFA filed an amicus curiae brief urging the court to dismiss the SEC’s allegations against Mr. Cutter and his registered investment advisory firm, CFG, specifically in relation to the application of the Investment Advisers Act to the sale of fixed indexed annuities. The brief argues that the SEC’s application of the Advisers Act on indexed annuity transactions relies on a flawed and unsupported reading of the Act and is inconsistent with the framework of federal securities law as it pertains to insurance versus securities matters.
Furthermore, NAFA’s brief asserts that the SEC’s actions contravene the primacy accorded to state insurance regulation, as established under the McCarren-Ferguson Act, the Dodd-Frank Act, and numerous relevant Supreme Court decisions. It also emphasizes the unnecessary nature of the SEC’s interference in light of the extensive state regulation of insurance, and argues that the regulatory overreach infringes upon the jurisdictional authority of state regulators to achieve a national best interest standard of conduct for annuity transactions. Additionally, NAFA’s brief asserts that the SEC’s actions inject unnecessary uncertainty over disclosures and duties with respect to indexed annuity transactions and run afoul of the Major Questions Doctrine.
Chuck DiVencenzo, president and CEO of NAFA, voiced his concerns, stating, “For years, our industry has faced significant threats to fixed indexed annuity distribution. In Mr. Cutter’s case, the SEC’s attempts at regulatory overreach simply go too far. The sale of annuities is highly regulated through a robust state-based framework, with elevated consumer protections thanks to the continued adoption of the National Association of Insurance Commissioners’ revised suitability rule, which holds annuity professionals to a best interest standard. The conflation of insurance and securities law only stands to undermine an effective regulatory regime that ensures consumer access to the products and professional advice Americans need to retire more securely.”
NAFA, the National Association for Fixed Annuities, is a premier trade association exclusively dedicated to fixed annuities and has been at the forefront of promoting the awareness and understanding of fixed annuities since its founding in 1998. With a mission to educate annuity salespeople, regulators, legislators, journalists, and industry personnel about the value of fixed annuities and their benefits to consumers, NAFA continues to be a leading advocate for the fixed annuity industry. For more information, visit http://www.nafa.com.
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