FINRA has censured Anaheim, California-based Centaurus Financial, Inc. and ordered the firm to pay a $475,000 fine plus $634,488.56 in customer restitution over unsuitable variable annuity exchanges sold by one of its representatives. The regulator also fined advisor Patrick Michael Carroll of Cadillac, Michigan $10,000 and suspended him for 12 months. The settlement, a Letter of Acceptance, Waiver and Consent dated July 15, 2026, details 88 unsuitable variable annuity exchanges that left customers paying $561,409.01 in surrender fees.
What FINRA found in the Centaurus Financial case
The action, FINRA Case No. 2019064499301, centers on deferred variable annuity exchanges recommended by Carroll, CRD No. 2676119. FINRA found that Centaurus Financial, CRD No. 30833, failed to establish, maintain, and enforce a supervisory system reasonably designed to oversee variable annuity recommendations by three representatives.
The firm’s written supervisory procedures gave principal reviewers no reasonable guidance on how surrender fees affect the suitability of an exchange. The firm also lacked any procedure to surveil its representatives’ rates of deferred variable annuity exchanges, including who was responsible, how often the review would happen, and what tools to use.
Carroll documented the surrender fees each customer paid and the bonus shares they would receive. FINRA found he still failed to reasonably consider and document how those fees affected the suitability of the exchanges. The regulator concluded he lacked a reasonable basis for recommending the 88 exchanges at issue.
Key numbers from the FINRA settlement
| Party | Sanction | Amount or term |
|---|---|---|
| Centaurus Financial, Inc. | Censure and fine | $475,000 |
| Centaurus Financial, Inc. | Customer restitution | $634,488.56 |
| Patrick Carroll | Fine | $10,000 |
| Patrick Carroll | Suspension, all capacities | 12 months, through August 4, 2027 |
| Customers | Surrender fees paid | $561,409.01 |
| Customers | Excess fees versus advisory shares | $73,079.55 |
Customers seeking ongoing management of their annuity sub-accounts paid $73,079.55 more in fees than they would have paid using advisory shares in an advisory account, according to the findings. Several customers also lost appreciated living benefit riders when their contracts were replaced.
The AWC adds a disclosure violation. FINRA found that Carroll willfully failed to disclose three federal tax liens and inaccurately attested on four annual compliance questionnaires that he had no undisclosed liens.
Why variable annuity exchanges hurt retiree portfolios
A variable annuity exchange replaces one contract with another. The new contract often pays a bonus credit, but the customer pays surrender charges to exit the old one. Those charges can consume a large share of the account value in the early years of a contract.
When an advisor recommends repeated exchanges without weighing those costs against the bonus, the customer absorbs the damage while the advisor collects a new commission. For retirees, losing an appreciated living benefit rider compounds the harm. Those riders lock in minimum income or withdrawal terms that grow more valuable with time. Replacing the contract strips the accumulated value and restarts the clock.
Red flags investors should recognize
- An advisor recommends exchanging an existing annuity for a new one with a bonus. The surrender fee and the bonus should be compared in writing before any move.
- The same advisor recommends multiple exchanges over several years. Each exchange generates a fresh commission and a fresh surrender-fee clock.
- The advisor’s BrokerCheck report shows undisclosed tax liens or inaccurate compliance attestations.
What affected investors can do now
Investors who purchased or exchanged variable annuities through Centaurus Financial can review the firm’s regulatory history on FINRA BrokerCheck under CRD No. 30833. Carroll’s individual record is available under CRD No. 2676119. Both records show the July 2026 AWC and the sanctions attached to it.
Restitution under the settlement covers a defined group of customers. Investors outside that group, or those with additional losses, generally pursue recovery through FINRA arbitration against the advisor and the supervising firm. Firms are responsible for failing to supervise the representatives they employ, and arbitration panels can hold both parties accountable.
How to recover your losses
Arbitration claims follow strict eligibility rules and filing deadlines. Waiting too long can forfeit otherwise strong claims, which is why an early review of account statements, surrender-fee schedules, and trade history matters.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut is a securities law firm founded by former Wall Street defense attorneys who shifted their practice to represent investors. The firm has recovered over $520 million for clients in securities matters and maintains a 98 percent success rate in resolved nontraded REIT cases. Attorneys are AV Preeminent rated through Martindale-Hubbell, designated as Super Lawyers, and hold a 5.0-star client review average. The firm operates on a contingency basis, with no recovery meaning no fee.
Contact Haselkorn & Thibaut today
Time matters in variable annuity recovery cases. The earlier you act, the stronger your position. The firm offers a free case evaluation to assess your losses, review your account history, and explain your options under arbitration or settlement.
- Main Phone: 1-888-885-7162
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Offices in Florida, New York, Arizona, Texas, and North Carolina. Former Wall Street defense attorneys with 95+ years of combined experience. No recovery, no fee.
