Michele L. Schaff and Jeffery E. Schaff
Discusses the significance of the Illinois Supreme Court ruling in Van Dyke v. White, which clarified that annuities are not securities in the state of Illinois, with a particular…
Abstract
Purpose
Discusses the significance of the Illinois Supreme Court ruling in Van Dyke v. White, which clarified that annuities are not securities in the state of Illinois, with a particular focus on the ramifications to insurance, brokerage and investment advisory standards of care as well as causes of action for breaches thereof.
Design/methodology/approach
Describes the Court’s ruling as it relates to the industry going forward. Does not discuss the specifics of the plaintiff’s case or history.
Findings
The statutory language of Illinois’ securities laws specifically excludes annuities from the definition of securities. For this reason, the Illinois Department of Insurance has sole authority over regulating annuities, giving the Illinois Department of Securities no authority, except to the extent there is an investment advisor breach pursuant to §12(J) of the Illinois Securities Law of 1953. The industry has yet to react or adjust to the Court’s ruling, so there may be a future wave of reactions.
Originality/value
Assists the reader in understanding the unique regulatory environment of annuities in Illinois, the relevant standards of care related to annuity advice and transactions, and remedies for grievances after the Illinois Supreme Court ruling in Van Dyke v. White.
Details
Keywords
Jeffery E. Schaff and Michele L. Schaff
Identifies fundamental errors, both mathematical and methodological, in the purported $17 billion annual benefit from the U.S. Department of Labor’s Conflict of Interest Rule…
Abstract
Purpose
Identifies fundamental errors, both mathematical and methodological, in the purported $17 billion annual benefit from the U.S. Department of Labor’s Conflict of Interest Rule, commonly known as the Fiduciary Rule.
Design/methodology/approach
Examines the methodologies and data used by the Council of Economic Advisers (CEA) in calculating the estimated $17 billion benefit of the Fiduciary Rule, and then recalculates the benefit according to the CEA’s stated methodologies and data descriptions. The approach is non-partisan, the review apolitical.
Findings
The article concludes that the estimated $17 benefit from the DOL’s Fiduciary Rule was grossly exaggerated and that other data suggests the Rule may not provide meaningful new protections for investors.
Originality/value
From the perspective of staunch fiduciary advocates, the calculation of the benefit to IRA investors from the DOL’s Fiduciary Rule is examined. The current measures that protect individual investors are also noted. The information may provide a turning point in the discussion of the Rule’s delay and potential rescission. It may also provide relevant points for the DOL to consider as it carries out its task of re-evaluating the Rule.
Details
Keywords
Jeffery E. Schaff and Michele L. Schaff
Explains the US Department of Labor’s newly proposed “Conflicts of Interest” rule and provides a critical analysis of its impact should it be adopted as proposed.
Abstract
Purpose
Explains the US Department of Labor’s newly proposed “Conflicts of Interest” rule and provides a critical analysis of its impact should it be adopted as proposed.
Design/methodology/approach
Explains the DOL’s proposed Conflict of Interest rule and discusses how it changes the current fiduciary standards of care under ERISA. The article then probes more deeply into the practical matters involved in implementing the rule, and into the realities of how it would impact fiduciary standards generally, investors, the financial services industry and securities arbitrations. Reactions to the proposed rule are then explained against the backdrop of the practical implications thereof.
Findings
This article concludes that the DOL’s proposed Conflict of Interest rule, albeit well-intended, is not reasonably designed to achieve its stated goal and would instead likely harm those whom it purports to help. Ironically, it also potentially waters down the existing high standards of current fiduciaries. The article supports the DOL’s goal of greater responsibility for financial service professionals and proffers an alternative solution that could achieve the desired result more effectively.
Originality/value
This article offers valuable insight on the realities of the proposed law and practical guidance on its implications to the investing public, the financial services industry and securities attorneys.