Cambridge Investment Research Sanctioned For Failure To Supervise Variable Annuity Exchanges

Soreide Law Group is investigating potential investor claims involving Cambridge Investment Research Inc. after FINRA sanctioned the firm for supervisory failures involving deferred variable annuity exchanges. Investors who incurred surrender charges or other losses in connection with deferred variable annuity exchanges recommended through Cambridge should review FINRA’s enforcement action against the firm below.

What Are Deferred Variable Annuities?

Deferred variable annuities are investment products that combine securities and insurance features and allow investors to select from a variety of investment options and contract features. Because these products can involve surrender charges, fees, and the potential loss of existing benefits when exchanged for a new annuity, FINRA Rule 2330(d) requires firms to maintain specific written supervisory procedures for deferred variable annuity transactions.

FINRA rules also require firms to implement surveillance procedures designed to identify representatives whose rates of deferred variable annuity exchanges may indicate inappropriate exchanges. These supervisory requirements are intended to help identify transactions that may unnecessarily increase costs for investors.

Why Did FINRA Issue Sanctions?

According to FINRA Letter of Acceptance, Waiver, and Consent No. 2022077257802, Cambridge Investment Research failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to monitor the rates of deferred annuity exchanges from at least January 2018 through February 2025.

FINRA found that the firm had no alert system, surveillance system, or other review process designed to monitor brokers’ deferred variable annuity exchange rates. According to FINRA, the firm's written supervisory procedures did not provide for the assessment of brokers’ exchange rates, did not contain procedures designed to identify inappropriate exchanges, and did not include policies reasonably designed to implement corrective measures when inappropriate exchanges occurred.

Cambridge Investment Research And Variable Annuity Exchanges

According to FINRA, because Cambridge did not maintain surveillance procedures designed to review deferred variable annuity exchange activity, the firm failed to detect 22 inappropriate exchanges conducted by a former broker. FINRA found that these transactions caused 14 customers to incur $129,938.79 in unnecessary surrender fees. The regulator further found that Cambridge did not implement procedures and surveillance designed to review deferred variable annuity exchange rates until February 2025.

FINRA Sanctions Cambridge Investment Research

As a result, FINRA determined that Cambridge Investment Research violated FINRA Rules 2330(d), 3110, and 2010. Cambridge consented to the sanctions imposed by FINRA. The regulator accepted the settlement on April 1, 2026. As part of the settlement, Cambridge was censured and fined $150,000.

Potential Sales Practice Violations Involving Variable Annuity Exchanges

The FINRA findings raise questions regarding whether certain deferred variable annuity exchange recommendations resulted in unnecessary surrender charges or other costs to investors. Investors may also question whether exchanges were properly reviewed and whether the potential costs and benefits associated with exchanging one annuity for another were adequately considered before recommendations were made.

Potential investor claims may involve unsuitable annuity exchange recommendations, excessive switching of annuity products, inadequate supervision, or other sales practice violations. Investors who experienced these issues may have legal options, including pursuing recovery through FINRA arbitration.

Did You Incur Losses Through Cambridge Investment Research?

Did you incur surrender charges or investment losses in connection with deferred variable annuity exchanges recommended through Cambridge Investment Research? You should contact Soreide Law Group at (888) 760-6552 or online and speak to a securities attorney concerning a potential recovery of your losses. Soreide Law Group has recovered losses for investors throughout the United States. The firm works on a contingency fee arrangement and advances all costs, meaning clients pay no attorney's fees unless a recovery is obtained.