WASHINGTON (Apr. 25, 2025) — The National Association for Fixed Annuities (NAFA), the Insured Retirement Institute (IRI), and Finseca are working with various state and federal regulators to bring clarity to the financial services and insurance industry for dual-licensed advisers who must operate under and comply with multiple regulatory regimes in serving their respective clients. We are concerned about regulatory overreach, and specifically regulation by enforcement, a real-world problem that creates ambiguity and uncertainty for our respective association members and ultimately harms American consumers. In light of this concern, the groups issued the followed joint statement:
“We have been closely following the Securities and Exchange Commission (SEC) v. Cutter Financial Group LLC (CFG) and Jeffrey Cutter case in the United States District Court for the District of Massachusetts, in which a jury verdict was reached yesterday. While jury verdicts do not carry binding precedential value, the outcome may still influence SEC enforcement strategy and examination practices. This raises concerns for dual-licensed professionals (i.e., securities and insurance) and firms, potentially increasing regulatory and legal exposure to non-securities transactions. The SEC and state insurance regulators each have important and complementary responsibilities in overseeing financial and insurance products. A balanced approach that respects the distinct authorities of both regulatory systems is essential to ensuring effective oversight, minimizing regulatory overlap, and protecting consumers through clear, coordinated, and appropriately tailored supervision.”
NAFA has led efforts to encourage near-uniform adoption of the NAIC’s Model #275 best interest standard across all 50 states to strengthen consumer protection while preserving access to the products and professional services Americans need to retire more securely. We believe that the robust state-based regulation of fixed indexed annuities is sufficient and are concerned about the ramifications of this decision on advisers who offer both securities and insurance as part of a holistic service model.
We are working with outside legal counsel, as well as our joint trades, to determine the full impact of this decision on the industry. Specifically, we are aiming to clarify what a duel-licensed individual must disclose about compensation at the point of sale and the capacity in which he or she is operating when making a sale or recommendation, and if any additional best practices recommendations are warranted based on those findings.
Next steps in the litigation will be post-trial motions and briefing, as well as the judge’s orders regarding possible penalties. Defendants’ Motion for Judgment as a Matter of Law is due May 21, 2025.