The U.S. Securities and Exchange Commission is seeking to define certain equity-linked financial products as securities in order to protect investors.

The SEC has published for public comment a proposed new rule that aims to protect investors from fraudulent and abusive practices in the sale of equity indexed annuities. The commission voted unanimously to issue a proposed rule for public comment that would establish the standards for determining when these products may be considered securities, and therefore subject to the investor protections afforded by the securities laws.

The move stands in contrast to Canadian authorities handling of certain equity-linked products that have raised investor protection concerns north of the border — such as principal-protected notes, which continue to be considered banking products.

In Canada, securities regulators will not be wading into an area where they have expressed suitability concerns. Instead, on July 1, a new disclosure regime for PPNs took effect, under the oversight of federal banking regulator, the Financial Consumer Agency of Canada.

The SEC notes that it has similar concerns with equity indexed annuities, namely that they are often sold to seniors, for whom they may be unsuitable investments due to charges that may lock up investors’ money for many years.

“Working with the North American Securities Administrators Association, the SEC has made cracking down on fraud in this area a top priority,” stated SEC chairman Christopher Cox, in a news release. “This is truly a joint federal-state partnership, and the SEC is proud to be working shoulder-to-shoulder with state securities regulators on this vital investor protection issue.”

The SEC’s proposed rule is intended to clarify the status under the federal securities laws of indexed annuities. If adopted, the proposed new definition would apply only to indexed annuities issued on or after the effective date of a final rule.