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Ohio National, Broker-Dealer Drop Federal Court Suit

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An independent broker-dealer and The Ohio National Life Insurance have agreed to end federal litigation in Massachusetts over one part of a dispute over annuity producer compensation.

The broker-dealer, Commonwealth Equity Services LLC, and Ohio National filed a joint stipulation of dismissal Jan. 21 with the U.S. District Court for the District of Massachusetts.

Commonwealth Equity and Ohio National said in the joint stipulation that they have agreed that “this action shall be dismissed, with prejudice, and with all rights of appeal waived. Each party shall bear its own costs and attorneys’ fees.”

(Related: District Court Rules Against Advisors in Ohio National Commission Cases)

Dismissing the action “with prejudice” would keep either party from reviving the dispute.

The federal case in Massachusetts is part of the litigation that resulted in 2018, when Ohio National decided to stop selling variable annuities and said it would stop paying trail commissions to the agents and brokers who sold the variable annuities.

The lawyers representing the agents have been trying to use a portion of the selling agreement between the agents and Ohio National,  and Federal Industry Regulatory Authority rules, to move the proceedings into arbitration.

District Court Judge Denise Casper ruled in favor of the agents in April 19. In March 2020, she denied efforts by Ohio National to have the case reopened.

Lawyers for Commonwealth Equity could not immediately be reached for comment.

Representatives for Ohio declined to comment on the case.

In June 2020, the 6th U.S. Circuit Court of Appeals upheld an Ohio state court judge’s dismissal of a state suit over Ohio National’s decision to stop paying variable annuity trail commissions.

The state judge and the appeals court ruled that Ohio National’s agreement was between Ohio National and a broker-dealer, not between Ohio National and agents, and that agents had no standing to sue.

— Read What Advisors, BDs Should Do About Ohio National’s End of Trailing Commissionson ThinkAdvisor.

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