In the case of Securities and Exchange Commission v. Variable Annuity Life Insurance Co. of America et al., 1958, the U.S Supreme Court ruled that variable annuities are securities under federal law and therefore subject to regulation by the Securities and Exchange Commission (SEC). The SEC had argued that these products were investment contracts because they involved a pooling of funds for investment purposes with returns dependent on those investments' success. On the other hand, insurance companies contended that their products were insurance rather than securities since policyholders bore no investment risk as benefits were fixed in amount and duration regardless of how underlying investments performed. However, the court sided with SEC stating that variable annuity holders do bear some risks associated with investing as their benefits could vary depending on market performance; hence such policies should be regulated like other securities.

In the dissenting opinion for SECURITIES AND EXCHANGE COMMISSION v. VARIABLE ANNUITY LIFE INSURANCE CO. OF AMERICA et al., Justice Harlan argued that variable annuities should not be classified as securities under the Securities Act of 1933 and therefore, should not fall under the regulatory jurisdiction of the Securities and Exchange Commission (SEC). He contended that these products are more akin to traditional insurance policies rather than investment contracts because they involve risk pooling among policyholders, which is a fundamental characteristic of insurance. Furthermore, he pointed out that state regulation already provided sufficient oversight over these products. Thus, subjecting them to federal securities laws would result in unnecessary duplication of regulatory efforts and could potentially disrupt state-level insurance regulations.