Investors who purchased or exchanged variable annuities on the recommendation of Centaurus Financial, Inc. (“Centaurus”) may have FINRA arbitration claims. Claims may exist if a financial advisor lacked a reasonable basis for the recommendation. Claims may also exist if the stockbroker or advisor misrepresented the nature of the investment.

FINRA Sanctions Centaurus Over Variable Annuity Supervision

Centaurus is an Anaheim, California-based broker-dealer with approximately 570 registered representatives. On July 1, 2026, the Financial Industry Regulatory Authority (“FINRA”) received a Letter of Acceptance, Waiver, and Consent (“AWC”) from the firm. Centaurus consented to a $475,000 fine. It also agreed to pay $634,488.56 in restitution to customers. See the AWC at the link below.

According to the AWC, Centaurus’s supervisory system was not reasonably designed between February 2016 and December 2025. This period covered certain variable annuity exchanges and purchases. The AWC also alleges violations of Regulation Best Interest’s (“Reg BI”) Conflict of Interest and Compliance Obligations. These violations involved B-share variable annuities paired with paid advisory agreements. Centaurus consented to FINRA’s findings without admitting or denying them.

The same AWC resolved charges against Centaurus representative Patrick Carroll. According to his FINRA BrokerCheck Report, Carroll recommended 88 unsuitable variable annuity exchanges from 2016 to 2019. These exchanges lacked a reasonable basis and caused customers to pay $561,409.01 in surrender fees. Some customers also surrendered valuable living benefit riders. FINRA further found that Carroll willfully failed to timely disclose over $1.2 million in federal tax liens. FINRA suspended Carroll for twelve months and fined him $10,000.

SEC Action Against Centaurus

This was not Centaurus’s first Reg BI-related regulatory action. On February 7, 2025, the SEC issued a cease-and-desist order against the firm. The order found that Centaurus and four representatives violated Reg BI’s Care Obligation. They recommended GWG Holdings, Inc. “L Bonds” to 18 retail customers between 2020 and 2021. Many of these customers were older investors with moderate or conservative risk tolerances. The SEC found these speculative, illiquid bonds unsuitable for many customers. GWG filed for Chapter 11 bankruptcy in April 2022. Centaurus and its representatives consented to pay $160,000 in disgorgement and penalties. See the SEC’s cease-and-desist order below.

FINRA Sanctions Centaurus Over Variable Annuity Supervision

Variable annuities are complex, long-term products combining securities and insurance features. Brokers may not fully disclose the risks and costs involved. These costs can include commissions of 7% or more on B-share sales. Surrender periods often last five to ten years, with steep charges for early withdrawal. Exchanging one annuity for another can trigger new surrender charges and fees. It may also cause investors to forfeit valuable benefits.

FINRA member firms must perform due diligence and disclose investment risks. They must also ensure recommendations suit each investor’s risk tolerance and objectives. Since 2020, Regulation Best Interest has required brokers to act in a customer’s best interest. Unsuitable recommendations may give rise to FINRA arbitration claims. More information is available on the firm’s FINRA arbitration practice page.

Investors who wish to discuss a possible claim may contact a securities arbitration lawyer at the Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. The firm has handled numerous cases involving securities and commodities, both in state and federal court and in arbitration. Attorneys at the firm are admitted in New York, Wisconsin, and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states when required by applicable rules).