Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker-dealer, The O.N. Equity Sales Company (CRD # 2936) was recently sanctioned by FINRA’s Department of Enforcement after an investigation into its failure to adequately supervise sales of variable annuities.
The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding The O.N. Equity Sales Company and variable annuities.
Registration Background for The O.N. Equity Sales Company
The O.N. Equity Sales Company has been a member of FINRA (formerly the NASD) since 1968 with its main office located in Cincinnati, OH. The firm conducts a general securities business which offers various investment products, including variable annuities. It has approximately 334 branch offices with approximately 760 registered representatives.
FINRA’s Allegations
According to FINRA Letter of Acceptance, Waiver and Consent (AWC) dated April 30, 2021, The O.N. Equity Sales Company consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:
- “From March 2014 through September 2017, [The O.N. Equity Sales Company] failed to establish and maintain a supervisory system, and failed to establish, maintain, and enforce written supervisory procedures, that were reasonably designed to supervise the sale of variable annuities”;
- “Between March 2014 and September 2017, Representative A recommended an unsuitable investment strategy to [The O.N. Equity Sales Company] customers”;
- “While associated with [The O.N. Equity Sales Company], Representative A recommended an unsuitable investment strategy to 76 customers involving variable annuities and whole life insurance policies that he characterized as “building your own bank” or “infinite banking””;
- “Representative A’s variable annuity sales were submitted to a team of principals for suitability review”;
- “[The O.N. Equity Sales Company’s] reviewing principals were aware that Representative A was recommending variable annuities, but they were not made aware of the other components of Representative A’s recommended strategy. In fact, no one at the firm conducted a suitability analysis of Representative A’s recommended investment strategy as a whole”;
- “[The O.N. Equity Sales Company’s] written procedures required that principals perform a suitability review for all variable annuity transactions”;
- “As a result of its failure to have reasonable supervisory systems and procedures, [The O.N. Equity Sales Company] approved all of Representative A’s recommended variable annuity transactions, including unsuitable recommendations to 76 customers”; and
- By virtue of his it’s actions, The O.N. Equity Sales Company violated NASD Rule 3010 and FINRA Rule 3110, regarding supervision; FINRA Rule 2330, regarding deferred variable annuities; as well as FINRA Rule 2010, regarding standards of commercial honor and principles of trade.
FINRA’s Sanctions
FINRA’s April 30, 2021 AWC also indicates that as a result of The O.N. Equity Sales Company’s failure to supervise the sales of variable annuities, it consented to the following sanction(s):
- A censure;
- A fine in the amount of $275,000.00; and
- Restitution in the amount of $1,001,141.86.
The O.N. Equity Sales Company Has A History of Regulatory Actions
In addition to The O.N. Equity Sales Company being censured and fined for its failure to adequately supervise sales of variable annuities, as described in the April 30, 2021 AWC, FINRA BrokerCheck for The O.N. Equity Sales Company reveals it has a prior history of regulatory actions, including but not necessarily limited to the following:
- On April 23, 2019 The O.N. Equity Sales Company settled with the SEC for its alleged failure to supervise a representative who misappropriated funds from 14 different investors. The firm was ordered to pay restitution in the amount of $40,000.00.
- On July 24, 2008 The O.N. Equity Sales Company entered into an AWC with FINRA regarding its alleged failure to supervise with respect to variable annuities. The firm was censured and fined $70,000.00.
- On April 22, 1997 The O.N. Equity Sales Company was sanctioned by the SEC for its alleged failure to supervise a with respect to direct investments and limited partnership securities. The firm was suspended for three months and ordered to pay a fine in the amount of $5,000.00.
The O.N. Equity Sales Company Has A History of Customer Complaints
FINRA BrokerCheck for The O.N. Equity Sales Company also reveals it has a history of customer complaints and/or customer-initiated arbitrations, including but not necessarily limited to the following:
- On September 7, 2004, a customer-initiated arbitration was filed naming The O.N. Equity Sales Company as a respondent. The customer alleged breach of fiduciary duty, misrepresentation, negligence, and failure to supervise. The customer further alleged damages in the amount of $1,000,000.00. On August 11, 2006, the arbitration panel issued an award in favor of the customer in the amount of $124,491.00.
- On September 14, 2012, a customer-initiated arbitration was filed naming The O.N. Equity Sales Company as a respondent. The customer alleged misrepresentation, suitability, negligence and failure to supervise. The customer further alleged damages in the amount of $50,000.00. On October 18, 2013, the arbitration panel issued an award in favor of the customer in the amount of $25,000.00.
If you or someone you know has or had a brokerage account with The O.N. Equity Sales Company and have concerns regarding losses in your investments, including variable annuities or possible sales practice violations including fraud, you may be entitled to recover lost funds. The Law Office of Kevin J. Deloatch, Esq. has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation. The time to file your claim may be limited so you should call today to avoid delay.
