Another LPL adviser sues Ohio National over variable annuity commissions

Chris Noone joins more than 10 other brokers and broker-dealers that have sued the insurer for eliminating trail compensation

Jan 2, 2019 @ 1:59 pm

By Greg Iacurci

Another LPL Financial adviser has sued Ohio National Life Insurance Co. and its subsidiaries for ceasing the payment of trail commissions on certain variable annuity policies, joining a chorus of other parties to have filed similar legal claims against the insurer.

The adviser, Chris Noone, claims Ohio National breached its contract when it announced in September that it would no longer pay trail compensation to brokers who sold variable annuities with a guaranteed minimum income benefit rider. That policy went into effect in mid-December.

Mr. Noone, a resident of Jackson, Miss., who has been an investment adviser representative of LPL since 2008, alleges Ohio National didn't have the right to "unilaterally terminate its obligation to pay trailing commissions." These are paid annually based on client annuity premiums and earnings.

Mr. Noone, formerly a registered broker with UBS Financial Services Inc., also claims the insurer unjustly enriched itself by pocketing the commission money instead of paying the trails. He seeks monetary and punitive damages.

Mr. Noone's attorneys didn't return a request to comment. Angela Meehan, a spokeswoman for Ohio National, declined to comment on pending litigation.

Mr. Noone is the second LPL adviser to sue Ohio National for lost variable annuity commissions. Lance Browning of Whitehouse, Texas, who stands to lose roughly $89,000 a year in commission payments from Ohio National, filed a complaint in November for alleged "unlawful" conduct. Mr. Noone filed his case Dec. 28 in the U.S. District Court for the Southern District of Mississippi.

Broker-dealers have also sued the insurance company in a bid to restore commission payments, including UBS, Commonwealth Financial Network, Next Financial Group Inc. and Veritas Independent Partners. Commonwealth and the six broker-dealers in the Cetera Financial Group network also filed arbitrations with the Financial Industry Regulatory Authority Inc., the brokerage industry's regulator.

Brokers and insurance executives have called Ohio National's elimination of some variable annuity commissions unprecedented among annuity sellers. The Insured Retirement Institute, a trade group, said the insurer's business decisions pose a risk to the annuity industry.

Ohio National filed a motion to dismiss Mr. Browning's case — the first to be filed — on Dec. 21, claiming he hadn't "alleged any viable claims against Ohio National." The insurer argues that the selling agreements for the variable annuities in question were executed between the insurer and broker-dealer, and that the broker is neither a party to the selling agreement nor an intended third-party beneficiary.

The most recent case, involving Mr. Noone, seeks to address this argument. Mr. Noone claims the selling agreements "make clear" that brokers are intended beneficiaries of these contracts.

"In Ohio, if the promisee intends that a third party should benefit from the contract, then that third party is an intended beneficiary who has enforceable rights under the contract," according to the complaint.

0
Comments

What do you think?

View comments

Recommended for you

B-D Data Center

Use InvestmentNews' B-D Data Center to find exclusive information and intelligence about the independent broker-dealer industry.

Rank Broker-dealers by

Featured video

INTV

Regulators' gloves are coming off with cybersecurity. Put up your dukes with these tips

Updated guidelines and some of the first-ever rule enforcements signal that regulators are getting serious about holding firms accountable for data breaches, according to special projects editor Liz Skinner and technology reporter Ryan Neal.

Latest news & opinion

Anatomy of an annuity buyout offer

Readers are invited to comment on whether the columnist should keep or ditch her Ohio National VA contract

Factions emerge in OneFPA overhaul

Critics fear the FPA is trying to take money and power from local chapters, which officials and proponents call overblown.

6 tech companies heading for IPOs this year

These Silicon Valley technology companies could make an IPO splash in 2019.

Crackdown showdown: Serious cybersecurity enforcement is coming in 2019, but are advisers ready?

When clients ask what advisers are doing to protect their data, only the firms that can give a satisfying answer will build trust with investors.

Finra punishes former Schwab broker for lying about role in $800,000 phishing scam

Regulator said Deming Payne failed to verify with customer imposter's instructions to wire money, and then lied about it.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print