Ohio National Financial Services Inc. has recently shed several of the many lawsuits it faced as a result of its 2018 move to halt trail commissions paid to brokers on variable annuity contracts with guaranteed minimum income benefit riders.
Meanwhile, the insurer is fighting several other cases brought by broker-dealers.
Last month, a U.S. appeals court shot down a long-running case, upholding an earlier district-court decision to dismiss the claims. That suit, filed by brokers at LPL Financial, Next Financial Group, Securities America and ProEquities, alleged that Ohio National breached its contracts by ending the selling agreements. The brokers had argued that they were third-party beneficiaries of the agreements under Ohio state law, although the courts disagreed.
The March 18 appeals court order found that the lower court made the correct conclusions. The broker-dealers were the beneficiaries of the annuity selling agreements — paid by Ohio National directly — with payments passed along to individual brokers, the courts found.
The higher court cited decisions in two other lawsuits against Ohio National, offering support for the defense that the insurer did not breach contracts or interfere with contracts between reps and broker-dealers, according to the order. The allegations of interference with contracts relied on Alabama state law.
“The subject of plaintiffs’ claim is that Ohio National owes them commissions. But, as the Sixth Circuit explained, the selling agreements address that subject directly, stating that Ohio National is not responsible for the compensation of a broker dealer’s sales representatives,” the order read.
By stopping trail commission on certain in-force annuities, Ohio National potentially deprived some brokers of tens of thousands of dollars in earnings, plaintiffs in the cases have argued.
Last year, Kestra Financial reached a settlement with the company in a separate lawsuit over the VA trail commissions, though terms were not disclosed. That case was one of several brought by firms, including others from Raymond James, RBC, UBS and Veritas.
The RBC case was voluntarily dismissed last August, several months ahead of a scheduled settlement conference. The cases from Raymond James, UBS and Veritas are ongoing.
Another case by Somerset Securities was voluntarily dropped in March, as was a case from Commonwealth Financial Network in January, court records show.
Ohio National declined to comment on the cases.
A $141M judgment and a federal asset freeze collide over one shrinking pool
The firm's CFO and EVP of Wealth Management Solutions are the latest executives to exit the broker-dealer.
Clients are saying they would consider switching advisors if another professional offered estate planning services, according to a new Trust & Will survey.
CEO Laurel Taylor says the fintech's composable AI stack helps workers optimize dollars across Trump Accounts, 529s, 401(k)s, and other employee benefits.
The bank has swiped three private banking veterans from BNY as the city climbs the ranks of America's fastest-growing wealth hubs.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
