O.N. Equity Sales Company


July 6, 2021

Type of alert:

Variable Annuities and Life Insurance  

We’ve posted many articles on the Investors’ Watchdog about abusive sales of variable annuities. Time and again, ChapmanAlbin attorneys have seen brokers enriched by VA sales, at their customers’ expense. An ounce of prevention is worth a pound of cure. If your broker or advisor is encouraging you to move retirement savings into a VA, get a second opinion before you make a decision.  And, you  can always  call the investor rights attorneys at ChapmanAlbin LLC, without cost or obligation, to get our take on the very complicated, high-commission investment vehicles.

Here’s the latest from the VA front: According to financial industry regulators, a broker working for Cincinnati-based  O.N. Equity Sales Company improperly sold variable annuities causing financial harm to their customers.

In April, 2021, the Financial Industry Regulatory Authority completed a months-long investigation into O.N. Equity Sales’ VA sales practices and published it, finding that the firm’s brokers had engaged in abusive sales practices. FINRA ordered O.N. Equity to pay $275,000 as a punishment and to reimburse customers who had been victimized by these abusive practices $1,001,141.86, inclusive of interest.

Broker Gains at Customers’ Expense?

FINRA’s investigators found O.N. Equity failed to detect one of its brokers was recommending an unsuitable investment strategy involving the liquidation of retirement funds to purchase variable annuities followed by the short-term withdrawal of funds from those annuities to purchase whole life insurance policies. The representative’s recommendations that his customers take withdrawals from their variable annuities shortly after they were purchased caused them to incur significant surrender charges, tax penalties, and additional charges.

Brokerage Firm: Asleep at the Wheel?

Brokerage firms like O.N. Equity must supervise the sale of all products, including variable annuities. Still, all too often, they fail in their duty to protect you, their client, as what happened here. The firm did not provide any guidance to reviewing principals about what they should do if specific special circumstances were present when reviewing a transaction, and it did not have any monitoring system to review for trends or patterns suggesting that representatives were disproportionately recommending transactions involving one or more of these special circumstances. As a result, reviewing principals failed to detect or take action when the representative’s recommended variable annuity sales met several of these special circumstances or revealed other red flags of possible unsuitability.

Warnings Fall on Deaf Ears

The findings also included that variable annuity issuers contacted the firm or its parent company on multiple occasions and raised concerns about the surrender charges being incurred by the representative’s customers. However, the firm failed to conduct a reasonable investigation in response to these inquiries. The firm’s inaction allowed the representative’s unsuitable recommendations to continue and additional customers to be harmed. (FINRA Case #2018059035703)

Don’t Sleep On Your Legal Rights

If your broker or advisor stuck you in a variable annuity without fully explaining the down-side risks and disadvantages of these complicated investment vehicles, you may have valuable legal rights. These do not improve with age. In fact, if you wait to long to act, you may lose your rights. Call ChapmanAlbin (216-571-2208) today. You’ll talk with an experienced investor rights attorney without incurring any charge or obligation.

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