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 new proposal could end the ban on promoting client reviews in states like California and Connecticut, giving state-registered advisors a level playing field with their SEC-registered peers.
Morningstar research data show improved retirement trajectories for self-directors and allocators placed in managed accounts.
Some in the industry say that more UBS financial advisors this year will be heading for the exits.
The Wall Street giant has blasted data middlemen as digital freeloaders, but tech firms and consumer advocates are pushing back.
Research reveals a 4% year-on-year increase in expenses that one in five Americans, including one-quarter of Gen Xers, say they have not planned for.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
