RedwoodAge.com

The Feds are trying to make it harder for elders to get duped into buying indexed annuities that tie up their money for many years.

The Securities and Exchange Commission is seeking public comment on a new rule that would attempt to limit abusive marketing practices. The rule would set standards for determining when the annuities would be subject to investor protections provided under securities laws.

“Working with the North American Securities Administrators Association, the SEC has made cracking down on fraud in this area a top priority,” said SEC Chairman Christopher Cox, noting his agency is also "working shoulder-to-shoulder" with states to end fraud.

The new rule would redefine the terms “annuity contract” and “optional annuity contract” under the Securities Act of 1933. That change would clarify their status under federal securities laws of indexed annuities, under which payments to the purchaser are dependent on the performance of a securities index.

The new definition would exclude an indexed annuity from existing insurance exemptions if the amounts payable by the insurer under the contract are more likely than not to exceed the amounts guaranteed under the contract.

Still, the new rule wouldn't take effect for 12 months after its publication in the Federal Register - if it is adopted at all. The agency is accepting comments through September 10.