26, Aug 2023
NAFA Advocates Against Regulatory Overreach in SEC v. Cutter Amicus Filing
Washington, DC, August 26, 2023 — NAFA, the National Association for Fixed Annuities, filed an amicus curiae brief 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. NAFA’s brief was filed in support of the Defendants’ Motion to Dismiss and urges the court to dismiss the SEC’s allegations contained in its Amended Complaint against Mr. Cutter and his registered investment advisory firm, CFG, as it relates to the application of the Investment Advisers Act with respect to his and his RIA’s sale of fixed indexed annuities.
NAFA’s brief argues that the SEC’s application of the Advisers Act on indexed annuity transactions (1) relies on a flawed and unsupported reading of the Advisers Act that is inconsistent with the framework of federal securities law as it relates to insurance versus securities matters; (2) contravenes the primacy accorded to state insurance regulation as established under the McCarren-Ferguson Act, the Dodd-Frank Act and numerous relevant Supreme Court decisions; (3) is unnecessary given the protection of consumers provided by extensive state regulation of insurance; (4) infringes upon the jurisdictional authority of state regulators to achieve a national best interest standard of conduct for annuity transactions; (5) runs afoul of the Major Questions Doctrine; and (6) injects needless uncertainty over disclosures and duties with respect to indexed annuity transactions.
“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,” said Chuck DiVencenzo, president and CEO of NAFA. “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.”