Same Annuity, Same Broker, Same Arbitrator = Another Client Victory
(Corrects last paragraph to show that other customers who allegedly received fraudulent sales pitches have not filed arbitration claims.)
One week after Wilbanks Securities was ordered by arbitrators to pay $1.07 million for allegedly negligent supervision and sales fraud involving an ING Landmark Variable Annuity, the Oklahoma City-based independent broker-dealer was hit with a second six-figure award involving another client in another city who bought the product.
Both annuities were sold by the same broker, according to one of the lawyers who successfully prosecuted the two decided cases.
A three-person panel of public Financial Industry Regulatory Authority arbitrators in Denver ordered Wilbanks to pay $130,789 to customer Harry Beres, matching the compensatory damages he sought, according to an award posted April 20 on Finra’s website.
Another arbitration panel in Salt Lake City on April 13 ordered Wilbanks to pay client Grace Huitt the million-dollar award, half of which was in compensatory damages and half in punitive damages. Her lawyers did not seek punitive damages in the Beres case but had asked for $1.8 million of punitive damages in the earlier case.
The arbitration panels, each of which was presided over by Richard Djokic, a Fort Collins, Colorado-based lawyer, did not award attorneys’ fees to either of the claimants. Arbitrators under Finra rules are instructed not to discuss their decisions and Djokic did not return a call for comment.
Jonathan Kurta, whose New York law firm Fitapelli Kurta, represented both clients, said broker John Robert Stevens sold each a high-commission ING Landmark Variable Annuity with a guarantee of a 7% annualized compound return despite his lack of understanding about the product.
“Annuities are extremely complex and he told all of his clients exactly the same thing,” Kurta said. “When you put a broker or a firm before arbitrators and ask how annuities work and what is supposed to happen and they can’t answer, it’s very effective.”
Aaron B. Wilbanks, president and CEO of Wilbanks Securities, represented the firm in the arbitrations after his counsel withdrew and argued that the statute of limitations on the client claims had passed, Kurta said. Wilbanks did not return a call for comment.
Insurance firms that create annuities argue that the guaranteed income they produce can be critical to individuals’ retirement security as long as the risks and contract terms of the various fixed and variable-rate products are understood.
Stevens, who began his brokerage career in 1996 and whose Stevens Economic Planning Concepts in Grand Junction, Colo., was affiliated with Wilbanks from 2006 until April 2014, died at the age of 63 in September, 2014.
Wilbanks had discharged him for alleged buying non-approved secured notes for clients without the firm’s approval and for guaranteeing to a client via a non-approved email platform that there would be no loss on the notes, according to his BrokerCheck history.
Kurt said he knows of eight other Wilbanks customers who bought the annuity following sales pitches similar to those received by Huitt and Beres. Those customers have not filed arbitration claims, he said.