A Massachusetts federal judge has ruled that one of several lawsuits filed over Ohio National’s decision to stop paying trailing commissions on a variable annuity should be handled in Finra arbitration, according to news reports.
Independent broker-dealer Commonwealth Equity Services and one of its advisors, Margaret Benison, allege Ohio National breached contract and “implied covenant of good faith and fair dealing” when it opted last year to stop paying trailing commissions on variable annuity contracts with a guaranteed minimum income benefit rider, effective Dec. 12, InsuranceNewsNet writes.
Commonwealth and Ohio National Equities are Finra members while Benison is a Finra associated person, but Ohio National Life Insurance Company and Ohio National Life Assurance Corp. are not, according to the insurance news website.
Ohio National argued in court papers cited by InsuranceNewsNet that ONLIC and ONLAC are therefore not subject to Finra arbitration.
But Judge Denise Casper ruled that a selling addendum "contains a valid, enforceable arbitration agreement between the parties, not just those entities already bound to Finra arbitration under the Finra rules,” the website writes, citing the ruling.
An Ohio National spokeswoman tells InsuranceNewsNet that the company never comments on legal matters.
Ohio National is facing lawsuits from several other broker-dealers over the trailing commission decision, including Dallas-based Triad Advisors, Conway, Ark.-based Veritas Independent Partners and LPL Financial broker Lance Browning, the website writes. But none of those suits are seeking arbitration, according to InsuranceNewsNet.