The Financial Industry Regulatory Authority (FINRA) has penalized Southern California-based broker-dealer Centaurus Financial Inc. $1.1 million for widespread supervisory failures related to variable annuity sales. As part of the settlement, Centaurus agreed to pay a $475,000 fine and $634,000 in restitution to affected customers without admitting or denying the findings.
Alongside the firm’s penalty, FINRA suspended Centaurus broker Patrick Carroll for 10 months and fined him $10,000 for allegedly recommending dozens of unsuitable variable annuity exchanges.
The Allegations According to FINRA, from February 2016 through December 2025, Centaurus failed to reasonably supervise variable annuity recommendations, particularly switches and exchanges. FINRA explicitly cited the firm’s failure to comply with Regulation Best Interest (Reg BI), which requires brokers to act strictly in the client’s best financial interest. Brokers allegedly recommended that clients purchase B-share variable annuities and enter into advisory agreements that drove up costs and triggered unnecessary surrender charges, significantly eroding the clients’ principal.
What This Means for Investors Variable annuities are complex, high-commission products. When a broker recommends “switching” or exchanging an existing annuity for a new one, it often resets the surrender period (locking up your money for years) and generates a massive new commission for the broker.
If your financial advisor frequently recommends moving your funds between different annuities, it is a glaring red flag for “churning” or unsuitable recommendations. Investors who incurred heavy surrender fees or sustained losses due to variable annuity switching at Centaurus or any other brokerage firm should immediately consult a securities arbitration attorney to explore filing a FINRA arbitration claim.
