FINRA has sanctioned Centaurus Financial, Inc. and its registered representative Patrick Michael Carroll over unsuitable variable annuity exchanges and a conflicted advisory-fee strategy that cost investors hundreds of thousands of dollars. Haselkorn & Thibaut, P.A., operating as Investment Fraud Lawyers, explains what the enforcement action means for customers who may still have a claim.
The Financial Industry Regulatory Authority, or FINRA, issued a Letter of Acceptance, Waiver and Consent (AWC) on July 15, 2026. Centaurus and Carroll accepted FINRA’s findings without admitting or denying them. Below is a summary of the key facts and what investors should consider.
What FINRA found
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Between February 2016 and October 2019, Carroll recommended 88 deferred variable annuity exchanges to customers without a reasonable basis. A variable annuity exchange — sometimes called a 1035 exchange — replaces one annuity contract with another, often generating surrender charges and extending lock-up periods. FINRA found these recommendations were unsuitable because customers incurred surrender charges, accepted longer surrender periods, paid higher fees, and in some cases lost valuable existing benefits.
Nine customers surrendered optional living-benefit riders as part of the exchanges, giving up lifetime income protections. Across all 88 exchanges, customers paid $561,409.01 in surrender charges alone.
| Sanctioned party | Key detail |
|---|---|
| Centaurus Financial, Inc. | CRD #30833, headquartered in Anaheim, California; FINRA member since 1993; approximately 570 registered representatives across roughly 364 branch offices |
| Patrick Michael Carroll | CRD #2676119, associated with Centaurus from Cadillac, Michigan; entered the industry in 1996; held Investment Company and Variable Contracts Products registration since September 2006, Investment Adviser Representative since June 2010, and General Securities Representative since September 2014 |
| Unsuitable exchanges | 88 deferred variable annuity exchanges recommended without reasonable basis (Feb 2016 – Oct 2019) |
| Customer surrender charges | $561,409.01 |
| Living-benefit riders surrendered | 9 customers lost existing income-protection riders |
| Advisory-fee overcharges | $73,079.55 in excess fees from B-share/ advisory strategy (June 2020 – Dec 2025) |
Centaurus supervisory failures
FINRA found that Centaurus failed to reasonably supervise Carroll’s variable annuity exchange recommendations between February 2016 and December 2025. The firm’s written supervisory procedures were not reasonably designed to detect problematic exchanges. Specifically, Centaurus failed to identify red flags in Carroll’s recommendations, provided insufficient guidance on surrender charges and lost benefits, and did not adequately monitor retirement-income needs, liquidity needs, or high-rate exchange activity.
The AWC also identified a separate strategy involving two unnamed Centaurus representatives. Between June 30, 2020 and December 31, 2025, these representatives recommended that customers purchase B-share variable annuities in brokerage accounts, generating approximately 7% commission for the firm. After 12 months, customers were then moved into advisory relationships paying an additional roughly 1% annual fee to manage subaccounts. Advisory-share versions of the same annuities carried annual product fees approximately 0.85% to 0.9% lower and imposed no surrender charges. Customers paid $73,079.55 more in fees than they would have with advisory-share annuities.
Sanctions imposed
| Sanction | Details |
|---|---|
| Centaurus — censure and fine | Censured; fined $475,000 |
| Centaurus — restitution | Ordered to pay $634,488.56 in restitution to affected customers |
| Carroll — fine | Fined $10,000 |
| Carroll — suspension | Suspended from association with any FINRA member in all capacities for 12 months |
| Rule violations (Centaurus) | Regulation Best Interest Conflict of Interest and Compliance Obligations; FINRA Rules 3110, 2330, and 2010 |
| Rule violations (Carroll) | FINRA Rules 2111 (suitability), 2330, 1122, and 2010 |
Broader enforcement context
Centaurus has faced prior regulatory action. On February 7, 2025, the Securities and Exchange Commission, or SEC, issued a cease-and-desist order against the firm for Regulation Best Interest Care Obligation violations. Those violations involved GWG Holdings L Bonds recommended to 18 retail customers in 2020 and 2021. Centaurus consented to $160,000 in disgorgement and penalties in that matter. That earlier action involved a different product and different supervisory failures, adding to concerns about oversight at the firm.
What this means for investors
The FINRA action confirms that broker-dealers remain accountable for supervising variable annuity exchanges and ensuring that recommendations serve customers’ interests. Investors who lost money through unsuitable annuity exchanges or paid excess fees from a conflicted advisory strategy may still have claims — even if the firm has already been sanctioned. If you hold a variable annuity recommended by Carroll or another Centaurus representative, our firm encourages you to review your account statements and transaction records.
Potential claims include violations of Regulation Best Interest, FINRA Rule 2111 (suitability), failure to supervise, and negligent misrepresentation or omission. The statute of limitations can bar claims that are not brought in time. We review these cases on a contingency-fee basis, meaning no recovery, no fee.
How we help investors recover losses
Our attorneys include former Wall Street defense counsel who now represent individual investors. We have a 98% success rate across more than $520 million in securities cases. If you lost money in an unsuitable variable annuity exchange or paid excess fees through a conflicted advisory strategy at Centaurus Financial, contact us at 1-888-885-7162 or through InvestmentFraudLawyers.com for a free case review.
Frequently asked questions
**What is a variable annuity exchange?** A variable annuity exchange — also called a 1035 exchange — replaces an existing annuity contract with a new one. While exchanges can make sense in limited circumstances, they often trigger surrender charges, extend lock-up periods, and eliminate benefits that the original contract provided.
**What did FINRA find Patrick Carroll did wrong?** FINRA found that Carroll recommended 88 deferred variable annuity exchanges without a reasonable basis. Customers incurred $561,409.01 in surrender charges, accepted longer surrender periods, paid higher fees, and in some cases lost income-protection benefits. He also violated FINRA Rules 2111, 2330, 1122, and 2010.
**What was the B-share advisory-fee strategy at Centaurus?** Two unnamed Centaurus representatives recommended that customers buy B-share variable annuities paying roughly 7% commission, then enter advisory relationships charging approximately 1% annually. Advisory-share versions of the same annuities had fees 0.85% to 0.9% lower and no surrender charges. Customers paid $73,079.55 more than necessary.
**What should I do if I lost money with Centaurus or Patrick Carroll?** Contact our firm at 1-888-885-7162 or visit InvestmentFraudLawyers.com for a free consultation. We work on contingency — no recovery, no fee. Time limits apply to all investment fraud claims, so reviewing your records promptly is important.
Past results do not guarantee future outcomes. This page provides general information and is not legal advice. No attorney-client relationship is formed by reading this content.
There is no assured recovery in any securities matter. Consult a qualified attorney regarding your specific situation.
