Patrick Michael Carroll

Centaurus Financial, Inc. (CRD #30833, Anaheim, California) and Patrick Michael Carroll (CRD #2676119, Cadillac, Michigan)

July 15, 2026 – A Letter of Acceptance, Waiver and Consent (AWC) was issued in which the firm was censured, fined $475,000, and ordered to pay $634,488.56 in restitution to customers. Carroll was fined $10,000 and suspended from association with any FINRA member in all capacities for 12 months. Without admitting or denying the findings, the firm and Carroll consented to the sanctions and to the entry of findings that the firm failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with applicable rules regarding recommendations of variable annuities by three representatives.

The findings stated that the firm failed to establish a supervisory system or WSPs reasonably designed to supervise recommended deferred variable annuity exchanges to determine if they were suitable because the firm did not provide reasonable guidance to principal reviewers regarding the impact of surrender fees on the suitability of exchanges, nor did it provide reasonably detailed standards for assessing the loss of benefits, such as living benefit riders. The firm lacked procedures reasonably designed to surveil its representatives’ rates of deferred variable annuity exchanges, including who was responsible for such surveillance, how often it would take place, what tools to use to conduct the surveillance, or what parameters to consider when evaluating whether exchange rates were inappropriate.

The findings also stated that Carroll recommended, and the firm failed to reasonably supervise, 88 unsuitable variable annuity exchanges that Carroll lacked a reasonable basis to recommend. Although Carroll documented the amount of the surrender fees each customer paid and the bonuses they would receive, he failed to reasonably consider and document the impact of surrender fees on the suitability of the exchange and, relatedly, whether, and to what extent, the customers would benefit from the bonus-share’s increased fees and surrender period given the amount of surrender fees they paid and the bonus amount the received. The firm failed to identify or investigate red flags, suggesting that the transactions may be unsuitable. The firm failed to reasonably consider key suitability factors, including the surrender fees imposed, totaling $561,409.01, and the loss of appreciated living benefit riders for several of the customers.

The findings also included that the firm’s written policies and procedures were not reasonably designed to achieve compliance with Rule 15l-1(a)(1) under the Securities Exchange Act of 1934 (Reg BI) or to address conflicts of interest associated with variable annuity and account-type recommendations, and the firm failed to reasonably supervise such recommendations by two representatives. The firm did not establish, maintain, and enforce written policies and procedures reasonably designed to mitigate the conflicts of interest related to incentives for these registered representatives to place their interests ahead of the customer’s interest in recommending products and services that pay both commissions and fees, resulting in potentially higher total costs for these representatives’ customers. In addition, the firm’s WSPs failed to address factors that these two representatives and their supervisors should consider in evaluating recommendations of variable annuities with various available share classes and with respect to related account type recommendations. Accordingly, the customers who were seeking ongoing management of their variable annuity sub-accounts paid $73,079.55 more in fees than they would have paid if they had purchased advisory shares in an advisory account. Subsequently, the firm updated its supervisory systems and WSPs.

FINRA found that Carroll willfully failed to disclose three federal tax liens and inaccurately attested on four annual compliance questionnaires from his firm that he did not have any undisclosed liens.

The suspension is in effect from August 5, 2026, through August 4, 2027. (FINRA Case #2019064499301)

If you have suffered losses as a result of Patrick Michael Carroll’s act and/or actions, we would like to hear from you. We are currently investigating claims on behalf of clients who have suffered significant losses in their portfolios that are managed by Patrick Michael Carroll The Schwartz Law Firm represents investors in claims against financial advisors and their firms. If you have questions about your potential claim or need assistance from an investment fraud lawyer, please contact us at 866-330-6707 or email Matthew Schwartz directly at mschwartz@tslfirm.com.