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 in state and federal courts and in arbitration. Attorneys at the firm are admitted to practice in New York, Wisconsin, and various federal courts across the country. The firm handles cases nationwide (in cooperation with attorneys located in those states when required by applicable rules).

As part of its continued variable annuity (“VA”) abuse crackdown, the Financial Industry Regulatory Authority (“FINRA”) recently censured and fined member firm Ameritas Investment Corp. (CRD# 14869) (“Ameritas”) $180,000 for alleged lapses in the supervision of VA sales by its financial advisors. In a letter of acceptance, waiver and consent (“AWC”), FINRA has disclosed that between September 2013 and July 2015, Ameritas sold 4,075 individual VA contracts. Of these sales, Ameritas sold nearly 700 L-share contracts, totaling about 17% of its overall VA sales, or about $11 million in aggregate VA L-share sales.

FINRA has prioritized VA sales practice misconduct as warranting enhanced regulatory oversight. Recent enforcement efforts by FINRA with regard to VAs has resulted in numerous fines levied in 2016 concerning allegations of sales abuse by brokers recommending unsuitable VAs and/or recommending the sale of one VA for another in order to generate commissions (a practice akin to churning, and commonly referred to as “switching”).

VAs are very complex financial products that typically charge significant commissions and fees. When a financial advisor sells a VA, they will usually receive a sizeable commission, ranging anywhere from 3-7%. Additionally, a VA contract typically carries various fees, such as a mortality expense (in connection with the contract’s death benefit), investment expenses associated with the sub-accounts holding securities, and administrative expenses on the hybrid security / insurance product. Of significance, L-share contracts usually carry even higher commissions and fees than standard VAs, due to the fact that L-share contracts have shorter surrender periods (after expiration of a surrender period, an investor in a VA can exit their investment without incurring a surrender charge).

Because L-share VA contracts typically carry higher commissions and fees, there is a very real temptation for a financial advisor to sell his or her client an L-share VA, without first conducting a suitability analysis to determine that the product best meets the investor’s stated objectives and profile. Moreover, under applicable industry rules and regulations, brokerage firms like Ameritas must seek to ensure that their registered representatives are properly trained and supervised when it comes to selling financial products, particularly complex products like VAs.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in recovering funds on behalf of investors who have suffered losses due to a range of misconduct, including the unsuitable recommendation by a broker to purchase and/or switch from one variable annuity to another VA. Investors may be able to recover their losses in FINRA arbitration. Investors who wish to discuss a possible claim may contact our office at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Reportedly, the New York State Department of Financial Services (“DFS”) launched an investigation in 2011 concerning alleged omissions on the part of AXA Equitable regarding its applications for approval to alter the Equi-Vest and Accumulator variable annuities. The change would substitute ATM-managed funds for previous managers. According to DFS’ allegations, AXA Equitable misled DFS regarding the change’s impact and failed to disclose the underperformance of the ATM funds under the previous managers. Allegedly, these actions resulted in a reduced return for investors, especially for those who paid fees to receive guaranteed minimum benefits and those who wanted to be more aggressive in their investment strategy. In order to settle the investigation, AXA Equitable agreed to pay $20 million on March 17, 2014.

Some AXA Equitable investors may have been misled about the variable annuity contract changes. In addition, certain characteristics of variable annuities, including high penalties for early withdrawal, long surrender periods and low rate of return, make these products unsuitable for many investors. Many brokers are motivated to make unsuitable recommendations because of the large commissions associated with variable annuities.

Variable annuities are a type of insurance product. With this product, the investor pays into an account now in exchange for the guarantee of a future payout. The investment is tied to a stock index return, making it variable. According to attorneys, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.

If you believe you were misled regarding Equi-Vest or Accumulator variable annuity contracts, or that you received an unsuitable recommendation to invest in variable annuities, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On March 27, a complaint was filed with the Financial Industry Regulatory Authority Office of Hearing Officers against Birli and Chapin regarding the State University of New York retirement program. According to the complaint, Birli and Chapin recommended their customers switch MetLife variable Annuities with new ones held outside the retirement plan in MetLife IRA accounts.

Allegedly, Birli and Chapin circumvented their firm’s general prohibition of direct annuities exchange by recommending to their customers that they surrender their annuities to purchase another product available within the retirement program, wait 90 days, and then sell the second product in order to purchase the MetLife IRA annuity.

According to stock fraud lawyers, the new annuities were unsuitable because their liquidity was affected by the seven-year surrender schedules they came with. Furthermore, investors lost accrued death benefits above and beyond their contract value. Allegedly, Birli and Chapin each received commissions of 7.15 percent through the switch.

Variable annuities are a type of insurance product. With this product, the investor pays into an account now in exchange for the guarantee of a future payout. The investment is tied to a stock index return, making it variable. According to securities fraud attorneys, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance.

If you suffered significant losses as a result of an unsuitable recommendation regarding variable annuities, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a stockbroker claims lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

According to stock fraud lawyers, variable annuities typically offer large sales commissions to brokers and, as a result, some brokers make unsuitable recommendations. Furthermore, tax deferrals associated with variable annuities make them particularly unsuitable for retirees if the retirees’ assets are already held in an account that provides tax deferral (such as an IRA). Reportedly, an arbitration panel recently awarded $112,000 to one investor who was sold variable annuities which then were put into the investor’s tax-deferred IRA account. This strategy negates or renders irrelevant any tax benefit that would have been provided by the variable annuity.

InvestmentNews recently reported that individuals who invest in variable annuities are facing a risk of forced annuitizations. If so, the annuitizations will eliminate some death benefits, which are a primary reason many investors have chosen to invest in variable annuities. A report by the Wall Street Journal states that while variable annuity claims lagged in 2013 after surging in 2012, the 2013 claims were still higher than the number of mutual fund and stock lawsuits.

According to securities fraud attorneys, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. Certain characteristics of variable annuities, including high penalties for early withdrawal, long surrender periods and low rate of return, make these products unsuitable for many investors.

Law Office of Christopher J Gray, P.C. attorneys are experienced in handling cases concerning unsuitable recommendations concerning variable annuities. If you suffered significant losses in variable annuities that were unsuitable for you, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.