For those following the saga of SEC Rule 151A, that seeks to regulate equity indexed annuities as securities, bringing those products under federal securities regulation as opposed to state by state insurance regulation, the US Court of Appeals for the DC Circuit issued its opinion in a case challenging the SEC's enactment of the rule. The Decision found that regulation of the products as securities was not unreasonable, but the Court held that the SEC did not fully follow required procedures in performing a complete analysis before enacting the rule. Specifically, the Court found that the SEC “failed to properly consider the effect of the rule upon efficiency, competition and capital formation." As a result, the Court ordered the SEC to reconsider the Rule.
So what happens next? My crystal ball is no better than yours, but this is what I think may be likely: the SEC will reconsider the Rule and do the required analysis necessary to satisfy the Court. The SEC will determine that the Rule need to be enacted and that it does not impermissibly affect efficiency, capital formation and competition. Such determination will then be affirmed by the Court. Absent legislation enacted by Congress to legislatively override Rule 151A (see the first link above detailing legislation introduced in Congress to do just that), the Rule will become effective at some point.