Colorado investor, Grace Huitt, has won an arbitration award in excess of $1 million due to misrepresentations made to her by the broker who sold her a variable annuity.
Ms. Huitt purchased an ING Landmark variable annuity in 2008. At or before the time of sale, her broker at Wilbanks Securities, Inc., a brokerage firm headquartered in Oklahoma City, OK, guaranteed Ms. Huitt 7% compounded annual growth of the variable annuity (the broker was not named in the arbitration claim). Ms. Huitt sold the annuity in 2012.
In her arbitration claim filed in January, 2016, Ms., Huitt alleged that her broker and Wilbanks committed common law fraud, breach of contract, breach of fiduciary duty, negligent supervision and violations of the Colorado Securities Act. She sought compensatory damages of over $800,000, punitive damages of $1.7 million and attorneys’ fees.
Wilbanks filed a motion to dismiss, arguing that the Statement of Claim was not timely filed in that the claim was filed more than six years after the purchase of the annuity (FINRA has a six year eligibility rule for the filing of claims). The panel denied the motion to dismiss at the arbitration hearing. The panel apparently felt that the conduct of the broker and Wilbanks that was the underlying cause of Ms. Huitt’s damages continued after the 2008 purchase up to the 2012 sale; therefore, FINRA’s six year eligibility rule was inapplicable.
In its April 13, 2017 decision, the Salt Lake City panel awarded Ms. Huitt $536,720 in compensatory damages, representing the difference between the promised return on the annuity and its actual performance. She was also awarded $536,720 in punitive damages. Huitt v. Wilbanks Securities, Inc., Arbitration No. 16-02226,
Commentators on this award state that Ms. Huitt was able to introduce evidence that other Wilbanks customers suffered a fate similar to Ms. Huitt. Additionally, the “guarantee” of the performance of the annuity was actually put in writing by the broker. These two factors probably account for the awarding of punitive damages by the arbitration panel.
This case also highlights the fact that variable annuities are complex investment products, not suitable for many investors. Indeed, commentators on this award noted that the broker himself/herself might not have completely understood how this particular annuity worked.
If you are considering purchasing a variable annuity, make sure that you completely understand all of the details about the annuity (including its risk characteristics, backend sales charges, etc., and how much your broker is being paid by the annuity company). If you own annuity, and feel that misrepresentations were made to you when you purchased it, or the annuity was not completely explained to you, you should consult with qualified counsel.
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
