The two main broker-dealers under the umbrella of Raymond James Financial Inc. last week sued insurer Ohio National Life Insurance Co. in federal court in Florida, alleging that the insurer had reneged on its obligation to pay compensation for sales of certain annuity products.
Raymond James & Associates Inc. and Raymond James Financial Services Inc. join a veritable conga line of brokerage firms that have sued Ohio National over its decision in the fall of 2018 to stop paying trail commissions to advisers who sell the company’s variable annuities.
At that time, the brokerage arm of Ohio National, Ohio National Financial Services Inc., informed broker-dealers that sold its variable annuities that it was terminating servicing agreements and cutting off trail commissions by the end of the year. That set up a showdown in the form of lawsuits with some of the largest brokerage firms in the country.
Firms including UBS, RBC and Veritas Independent Partners, among others, have filed cases against Ohio National, and much of the litigation is pending.
A spokesperson for Ohio National, Lisa Doxsee, said the company declined to comment about the Raymond James lawsuit.
“This is a straightforward case about an insurance company, Ohio National, that designed a product, promised to compensate financial firms like Raymond James for selling that product, later determined it was losing money on that product, and then sought to minimize its losses by breaking its promise and refusing to pay the compensation it was contractually obligated to pay to the financial firms who had previously sold the product,” according to the complaint, which was filed last Wednesday in U.S District Court in Tampa, Fla.
Ohio National and its related companies “decided they would prefer paying attorneys to defend their actions rather than continue paying what amounts to approximately $10 million in annual trail commissions to Raymond James, and its financial advisers alone,” the complaint alleges.