While the universe of securities is broad, the Securities Act of 1933 (“Securities Act”) generally requires that any offer or sale of a security to the public be registered with the Commission. For that reason, the Commission should take steps to ensure that registration statement disclosure is material and informative to prospective purchasers. By the same token, the Commission should avoid requiring disclosures that are irrelevant and distract readers from the important information.

Purchasers of fund and insurance products have different disclosure needs than investors in operating companies. Previously, the Commission has adopted specific registration statement forms for these products. For example, open-end mutual funds, including exchange-traded funds, register on Form N-1A, closed-end funds register on Form N-2, separate accounts organized as unit investment trusts (“UITs”) that offer variable annuity contracts register on Form N-4, and separate accounts organized as UITs that offer variable life insurance policies register on Form N-6.

When there is not a specific form, the default form for general registration is Form S‑1, which has been used by registered index-linked annuities (“RILAs”) to date.[1] While Form S-1 has specific disclosure requirements for securities such as capital stock and debt, it is not specifically tailored for products like RILAs. Thus, Form S-1 does not have specific disclosure requirements for RILAs and their complex features.

However, Form S-1 requires the disclosure of extensive information about the registrant issuing the securities that may be less material to a RILA purchaser than information about the annuity contract’s features, risks, and expenses. Required information about the registrant includes management’s discussion and analysis of financial condition and results of operations, disclosure about executive compensation, and financial statements prepared in accordance with U.S. generally accepted accounting principles, which may be less important to RILA purchasers relative to disclosures about the product itself.[2] To date, RILA sponsors have been allowed variances from the express requirements of Form S-1 in order for the prospectuses to focus on disclosures most relevant to RILA purchasers.[3]

Today, the Commission is adopting rule and form amendments to implement the bipartisan Registered Index-Linked Annuities Act of 2022 (“RILA Act”).[4] Accordingly, the Commission is amending Form N-4 and modifying that form to accommodate RILA offerings.[5] In response to comments received on the proposal,[6] the Commission also will require offerings of registered market-value adjustment annuities (“MVAs”) to register on Form N-4. RILAs and registered MVAs share similar features, and thus the amendments to Form N-4 will provide registered MVAs with a more tailored form to register these offerings. The Commission is also adopting other amendments to facilitate the registration of RILA and MVA offerings, including the use of optional summary prospectuses and calculation of filing fees.[7]

As a member of the Senate Banking Committee staff during the 117^th Congress, I was pleased to work with the offices of Senators Tina Smith and Thom Tillis when they introduced the RILA Act. While I am disappointed that the Commission did not meet the 18-month statutory deadline, I am pleased to support this rulemaking.

The amendments to Form N-4 being adopted today provide RILA issuers – and more importantly, investors – with a form that elicits specific disclosure about these products. In addition, the package of amendments, including the ability to file post-effective amendments[8] and permitting RILA issuers to use a “free writing” prospectus under the conditions of rule 433 under the Securities Act, will help smooth the transition for RILA and MVA offerings.

I recognize the staff’s efforts to identify and recommend “good government” technical amendments to update the rules and Forms as part of the rulemaking. These amendments may not generate headlines, but they are necessary improvements to keep the Commission’s regulatory infrastructure up to date. For example, the Commission is amending Form 24F-2, the form that permits investment companies – and now non-variable annuities – to pay the registration fees for an indeterminate number of securities. One of the Form’s legacy instructions dates back to when open-end funds and unit investment trusts transitioned to the Form. As such, this legacy instruction permits a credit for any non-claimed redemptions in a prior fiscal year that ends no earlier than October 11, 1995. It is long past time to remove that outdated instruction, and I laud the staff for their attention to these details.

My thanks to the staff of the Division of Investment Management, the Division of Economic and Risk Analysis, and the Office of the General Counsel for their efforts. I also thank the Office of the Investor Advocate for their diligent work on investor testing which helped to inform this rulemaking.