Cambridge Investment Research, Inc has agreed to pay a fine of $150,000 and accept a censure as part of a settlement with the Financial Industry Regulatory Authority (FINRA). The settlement stems from findings that, over several years, the firm failed to maintain an adequate supervisory system for monitoring deferred variable annuity exchanges.
According to the settlement, from at least January 2018 to February 2025, Cambridge did not establish and maintain a supervisory system, including written supervisory procedures (WSPs), that was reasonably designed to surveil rates of deferred variable annuity exchanges. This failure affected the firm’s ability to identify problematic transactions in a timely manner.
Supervisory failures and customer impact
As a consequence of these supervisory deficiencies, Cambridge failed to detect 22 "inappropriate exchanges," as defined in FINRA Rule 2330(d), executed by a former registered representative. These exchanges caused 14 customers to incur unnecessary surrender fees totaling $129,938.79.
FINRA found that Cambridge’s failure to implement an effective supervisory framework for monitoring deferred variable annuity exchanges led directly to these customer harms. The conduct resulted in violations of FINRA Rules 3110, 2330(d), and 2010.
Sanctions and restitution
In resolving the matter, Cambridge agreed to a $150,000 fine and a censure. In addition to the monetary penalty, the firm must pay restitution in the amount of $129,938.79, plus interest, to the affected customers who incurred unnecessary surrender fees as a result of the inappropriate exchanges.
The settlement underscores FINRA’s focus on firms’ supervisory responsibilities, particularly in connection with complex products such as variable annuities. The requirement to pay restitution, in addition to the fine and censure, is intended to address the financial impact on the customers involved.
Firm background
Cambridge, which has been a FINRA member since 1995, maintains its principal place of business in Fairfield, Iowa. The firm conducts a general securities business and offers investment products and services, including variable annuities, to retail customers. Cambridge has approximately 4,900 registered representatives.
