Patrick Carroll Of Centaurus Financial Fined By FINRA For Unsuitable Advice

Securities broker Patrick Michael Carroll [CRD: 2676119, Cadillac, Michigan] has disclosures including a regulatory action and investor complaint, according to Financial Industry Regulatory Authority (FINRA) BrokerCheck records. Carroll joined Centaurus Financial Inc. as a securities broker on September 20, 2006, and as a financial advisor representative on June 24, 2010. The disclosures described below include FINRA allegations of unsuitable recommendations and a settled client complaint.

FINRA Sanctioned Carroll For Unsuitable Recommendations

In Case No. 2019064499301, FINRA imposed a $10,000 fine and a 12-month suspension on Patrick Carroll. He agreed to the settlement without admitting or denying FINRA’s findings.

FINRA alleged that Carroll made unsuitable recommendations involving 88 variable annuity exchanges between February 2016 and October 2019. In many cases, investors exchanged B-share variable annuities they had purchased several years earlier for bonus-share annuities that included stepped-up death benefit riders.

Because the original annuities were still subject to surrender periods, investors generally paid surrender charges of at least 3 percent. Those charges totaled $561,409.01. FINRA also stated that the replacement annuities commonly carried higher fees and longer surrender periods than the contracts being replaced.

According to FINRA, 25 investors lost existing contract benefits when completing the exchanges, including nine investors who gave up living benefit riders. FINRA alleged that Carroll did not sufficiently evaluate or document whether the replacement products’ death benefits justified the surrender costs, increased fees, extended surrender periods, and loss of prior benefits. FINRA further claimed that he did not adequately consider the investors’ insurance coverage, financial circumstances, or expected use of the annuities for retirement income.

Centaurus Financial Inc. received separate sanctions arising from the matter. FINRA censured the firm, fined it $475,000, and ordered it to pay $634,488.56 in restitution. FINRA alleged that Centaurus failed to maintain and enforce reasonable supervisory controls over certain variable annuity exchanges, annuity share-class recommendations, advisory arrangements, and related conflicts of interest.