## Facts

- Life-insurance companies issued fixed indexed annuities (FIAs), insurance products guaranteeing a minimum credited interest rate while linking additional credited interest to a securities index subject to caps and related formulas.
- The Securities Act of 1933 exempts from registration “any insurance or endowment policy or annuity contract” issued by a regulated insurer under § 3(a)(8).
- The SEC adopted Rule 151A (2009), providing that certain FIAs are not exempt “annuity contracts” under § 3(a)(8) and therefore are “securities” subject to federal registration and disclosure.
- Petitioning insurers sought review in the D.C. Circuit, challenging (a) the SEC’s statutory interpretation and (b) the adequacy of the SEC’s consideration of “efficiency, competition, and capital formation” required by § 2(b) of the Securities Act.

## Issues

1. Whether § 3(a)(8)’s term “annuity contract” unambiguously includes FIAs, or whether the SEC could reasonably interpret the exemption to exclude certain FIAs under Chevron.
2. Whether the SEC satisfied § 2(b) by properly considering the rule’s effects on efficiency, competition, and capital formation when adopting Rule 151A.

## Decision

- The court held that § 3(a)(8) is ambiguous as applied to FIAs and that the SEC’s risk-allocation approach—treating products where purchasers bear significant market-linked risk as outside the exemption—was a permissible construction under Chevron.
- The court held that the SEC failed to properly consider the rule’s effects on efficiency, competition, and capital formation as required by § 2(b).
- The court denied the petitions as to the Chevron/statutory-interpretation challenge but granted the petitions on the § 2(b) ground.
- The court vacated Rule 151A.

## Legal Principles

- When statutory text does not resolve whether a product falls within a Securities Act exemption, the SEC may receive Chevron deference for a reasonable interpretation adopted through rulemaking.
- For § 3(a)(8), the allocation and degree of investment risk borne by the purchaser is a relevant basis for distinguishing exempt insurance annuities from regulated securities.
- Section 2(b) requires the SEC, in Securities Act rulemaking, to meaningfully consider the action’s effects on efficiency, competition, and capital formation; conclusory discussion is insufficient.
- A rule may be vacated where the SEC’s economic consideration and response to significant record comments do not satisfy § 2(b).

## Conclusion

The D.C. Circuit upheld the SEC’s authority to interpret § 3(a)(8) to exclude certain FIAs based on purchaser-borne market-linked risk, but vacated Rule 151A because the SEC did not adequately consider the rule’s effects on efficiency, competition, and capital formation as required by § 2(b).


Am. Equity Inv. Life Ins. Co. v. SEC, 613 F.3d 166 (D.C. Cir. 2010)