Market Timers Target Annuities
Investment News (07/01/02) Vol. 18, No. 6 p.3; Hansard, Sara

Some market timers are suing when the insurance companies that sell the variable annuities that the timers are targeting try to stop them, but representatives of the mutual fund and variable-annuity industries say that market timers can damage a fund's investment strategies because they move large amounts of money in and out of funds quickly. The past year has seen three lawsuits filed against insurers that tried to stop investors from market timing, catching the attention of both the industry and federal regulators, and the Security and Exchange Commission supports the industry's attempts to stop market timing. Some funds have established redemption fees for short-term trading, which seems to help. A case against Equitable Life Assurance Society was decided in Equitable's favor because the insurer's annuity prospectus indicated that it was not designed for market timing, and Prudential Insurance won a dismissal of a case against it, but a case against AXA Client Solutions is still ongoing.


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