Cambridge Investment Research Fined $150,000 By FINRA
An American broker-dealer and asset management firm has been censured and fined by the Financial Industry Regulatory Authority (FINRA) after failing for seven years to properly monitor its representatives’ variable annuity exchange activity, leaving 14 customers out of pocket by nearly $130,000.
FINRA said in a release this week that there were supervisory failures by Cambridge Investment Research, Inc., headquartered in Fairfield, Iowa, spanning from January 2018 to February 2025.
The firm, which employs approximately 4,900 registered representatives across 2,800 branches, is said to have failed to establish adequate written procedures to surveil the rates at which its staff were conducting deferred variable annuity exchanges.
As a result, FINRA stated that Cambridge missed 22 so-called “inappropriate exchanges” carried out by a former representative, which resulted in 14 customers incurring $129,938.79 in unnecessary surrender fees.
Under the terms of the Letter of Acceptance, Waiver, and Consent (AWC) filed with FINRA, Cambridge will pay a $150,000 fine and provide full restitution of $129,938.79 plus interest to the affected customers. The firm has also received a formal censure.
FINRA noted that Cambridge had no alert systems or review mechanisms in place to flag abnormal exchange rates, nor any procedures to address such conduct when identified.
The firm revised its written supervisory procedures in February 2025, implementing new surveillance tools to monitor variable annuity exchange rates and enhance oversight of surrenders carrying charges.
Cambridge Investment Research accepted and consented to the findings by FINRA without admitting or denying them.
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