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Regulation and Compliance > Litigation

Advisor Group Seeks at Least $900K From Venerable in Lawsuit

By Jeff Berman

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What You Need to Know

  • Advisor Group alleges Venerable breached the terms of a marketing agreement between the firms.
  • Private equity firm Reverence Capital Partners is a majority owner of Advisor Group and a part owner of Venerable.
  • The broker-dealer is seeking at least $900,000 in compensatory damages.

Advisor Group is seeking at least $900,000 from Venerable Insurance and Annuity Co. and Directed Services, alleging the variable annuity firm and its affiliate breached the terms of a marketing and support agreement by abruptly terminating the deal and payments made to the broker-dealer under the pact.

In a complaint filed against Venerable and Directed Services in U.S. District Court for the Eastern District of Pennsylvania, Advisor Group said that, on or about Aug. 31, 2015, the defendants entered into a letter agreement with the BD under which Advisor Group would provide marketing services and support to Venerable and Directed Services for certain insurance products.

The complaint was first reported by InvestmentNews, which pointed to a twist in the dispute: Private equity firm Reverence Capital Partners is a majority owner of Advisor Group and a part owner of Venerable.

Reverence Capital Partners declined to comment on Tuesday. Advisor Group and Venerable did not immediately respond to requests for comment.

As part of the agreement, Venerable and Directed Services were to provide Advisor Group with a quarterly “marketing allowance” with a “floor” set at $300,000 annually, according to the complaint. If the allowance wound up being less than $300,000, the difference was to be included as a supplement to the fourth-quarter payment, Advisor Group said.

Although the term of the agreement was only one year, the deal automatically renewed for successive one-year periods, unless either party provided written notice to the other 60 days prior to the end of the first year or renewable periods, according to the complaint. Compensation under the deal was also to continue being paid for five years from the date of termination, Advisor Group said.

After Venerable Holdings acquired the defendants from Voya Financial on or about June 1, 2018, Ken Brown, Venerable chief operations officer and executive vice president (and previously senior vice president of sales at Voya), wrote to Advisor Group, terminating the letter agreement and alleging “no additional marketing allowance payments shall be due or payable after this date,” according to the complaint.

Advisor Group contacted the defendants to inform them that they had a continued obligation to continue making minimum annual payments for five years following the termination, the complaint alleges. To date, however, the defendants had yet to make any post-termination payments, according to Advisor Group.

In addition to the minimum of $900,000 in compensatory damages the BD is requesting, it is also seeking interest, legal fees and a declaratory judgment finding Venerable must honor the terms of the agreement.

Jeff Berman

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