FINRA Sanctions Former Advisor for Unsuitable Variable Annuity Exchanges

Posted on June 17th, 2025 at 11:40 AM
FINRA Sanctions Former Advisor for Unsuitable Variable Annuity Exchanges

From the desk of James Eccleston at Eccleston Law

The Financial Industry Regulatory Authority (FINRA) has fined and suspended former broker Thomas Vigil for making unsuitable variable annuity recommendations that resulted in customers paying higher fees.

According to a FINRA Acceptance, Waiver and Consent (AWC), from June 2019 to February 2020, Vigil recommended 10 unsuitable L-share variable annuity exchanges to nine customers and two unsuitable variable annuity purchases to two others. Those recommendations lacked a reasonable basis and led customers to incur increased costs.

As a result, FINRA imposed a 12-month suspension, a $10,000 fine, and ordered Vigil to pay $25,436 in restitution plus interest.

Variable annuities offer various contract features and optional riders. L-share annuities, in particular, carry higher fees in exchange for shorter surrender periods, making them potentially unsuitable when paired with long-term riders like a Guaranteed Minimum Withdrawal Benefit (GMWB) rider. According to ThinkAdvisor, GMWB riders typically require the customer to hold the annuity for at least five years without withdrawals to realize its full benefit.

In this case, Vigil recommended customers replace their existing annuities with L-share contracts carrying four-year surrender periods, combined with GMWB riders guaranteeing at least 10 years of 6 percent annual step-ups — a mismatch of product design and intended use.

Vigil failed to perform or document any suitability assessment for these transactions. He also neglected to conduct a comparative analysis of the costs, fees, and benefits between the surrendered and replacement annuities. Documentation falsely claimed the replacements would reduce fees, though they actually increased customer expenses by 50 basis points.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

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