WASHINGTON - Insurance companies are soon to find enforcement actions against them aired for all to see. The Securities and Exchange Commission is working on cases in which insurers made special arrangements for market timing, according to Ari Gabinet, district administrator of the SEC's Philadelphia District Office. "You may expect to see more cases rising up," he told attendees at the Regulatory Affairs Conference sponsored by the National Association of Variable Annuities.
One case Gabinet is familiar with involves an insurance company that, in addition to offering its policy to hedge funds to use as a market-timing vehicle, cut a revenue-sharing deal with the fund families managing the underlying funds. "The funds agreed to split a piece of the advisory fee [for those assets], making it doubly lucrative for the insurers," Gabinet said.