FINRA Sanctions Cambridge Investment Research for Supervisory Failure in Variable Annuity Exchanges
From the desk of Jim Eccleston at Eccleston Law
The Financial Industry Regulatory Authority (FINRA) has censured Cambridge Investment Research and ordered the firm to pay nearly $280,000 after finding that it failed to properly supervise variable annuity exchanges, according to AdvisorHub.
The sanctions include a $150,000 fine and approximately $130,000 in restitution to affected customers. According to FINRA, customers incurred unnecessary surrender fees as a result of improper annuity exchanges.
FINRA found that, from 2018 through 2025, Cambridge failed to implement a supervisory system capable of monitoring variable annuity exchange activity. Specifically, AdvisorHub reports that the firm did not establish controls to track exchange rates or flag potentially unsuitable recommendations. As a result, the firm failed to detect a registered representative who executed 22 improper annuity swaps, which generated about $130,000 in unnecessary surrender charges for 14 customers.
FINRA determined that Cambridge violated its rules governing standards for deferred variable annuities, which require heightened supervision due to the complexity of these products. According to AdvisorHub, the regulator also cited violations of FINRA Rule 2010, which mandates that broker-dealers conduct business in accordance with high standards of commercial honor.
The firm resolved the matter through a FINRA Acceptance, Waiver and Consent (AWC) letter, without admitting or denying its findings.
According to AdvisorHub, FINRA did not identify the broker involved in the improper exchanges but noted that the individual previously settled with the regulator. In a prior action from December 2021, FINRA fined and suspended a former Cambridge broker for recommending annuity exchanges without reasonably considering surrender fees, loss of benefits, and liquidity concerns. The individual also paid restitution.
AdvisorHub reports that this action follows an earlier supervisory case. In March 2021, FINRA ordered Cambridge to pay $3.4 million, including $3 million in restitution, for failing to monitor sales of a high-risk alternative mutual fund that later collapsed in 2018.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, finra sanctions, variable annuities, failure to supervise, cambridge investment research, securities law




