The Scheme That Hid in Plain Sight

Between June 2019 and February 2020, a registered representative at Infinity Financial Services convinced nine clients to exchange their existing variable annuities for new ones. Two additional clients were sold variable annuities outright. All twelve transactions were unsuitable. All twelve were approved by a registered principal at the firm. None of the clients needed the new products. All of them paid more in fees. Several lost valuable tax benefits and contractual protections they already owned.

This was not a case of a rogue advisor operating in the shadows. Every recommendation was documented. Every transaction was reviewed. Every approval was signed off by firm management. The problem was not that oversight failed. The problem was that oversight did not exist.

From June 2019 to the present, Infinity Financial Services failed to establish or maintain any supervisory system to track how frequently its representatives were exchanging client annuities. The firm had no written procedures explaining who was responsible for monitoring exchange rates, how often such reviews should occur, what tools to use, or what thresholds would trigger scrutiny. In practice, the firm conducted zero surveillance of annuity exchange activity. A representative could churn client accounts indefinitely, and no alarm would sound.

On May 5, 2026, FINRA accepted a settlement from Infinity Financial Services in Case No. 2020065124802. The firm was censured, fined $25,000, and ordered to pay $25,436 in restitution to the harmed clients. It also agreed to implement proper supervisory procedures within 180 days and certify compliance to FINRA staff.

The restitution amount nearly equals the fine. This is unusual. It suggests the harm was clear, quantifiable, and entirely preventable.

The Facts

Infinity Financial Services is a FINRA member firm headquartered in Oakland, California. It has been registered since 2007 and operates 33 branch offices with approximately 40 registered representatives. The firm conducts a general securities business, including the sale of variable annuities.

Variable annuities are complex financial products that combine investment features with insurance contracts. They allow investors to allocate funds across different sub-accounts, similar to mutual funds, while offering tax-deferred growth and optional benefits such as guaranteed income streams or death benefits. Because of their complexity, they carry significant fees, including management fees, mortality and expense risk charges, and optional rider fees.

One common share class is the L-share annuity. L-shares are designed for investors who prioritize liquidity. They impose shorter surrender periods, typically three to four years, but charge higher annual fees in exchange for that flexibility. This structure makes sense for investors who may need to access funds relatively soon.

Another common feature is the living benefit rider. These riders guarantee minimum income levels or withdrawal amounts over an extended period, typically requiring the investor to hold the annuity for at least five years without making withdrawals to obtain full value. Living benefit riders are expensive. They increase annual costs significantly.

Pairing an L-share annuity with a long-term living benefit rider is a contradiction. The investor pays extra for liquidity they cannot use without forfeiting the benefit they paid extra to obtain. It is a combination that benefits the seller, not the buyer.

This was the structure the Infinity Financial representative recommended to multiple clients.

FINRA Rule 2330 governs the sale and exchange of variable annuities. It requires firms to have a reasonable basis to believe that a recommended transaction is suitable based on the customer’s age, investment objectives, financial situation, and existing holdings. When recommending an exchange, the firm must consider whether the customer will lose existing benefits, incur higher fees, or face longer surrender periods in the replacement product.

FINRA Rule 2330(d) goes further. It explicitly requires firms to “implement surveillance procedures to determine if any of the member’s associated persons have rates of effecting deferred variable annuity exchanges that raise for review whether such rates of exchange evidence conduct inconsistent with the applicable provisions of [FINRA Rule 2330], other applicable FINRA Rules, or the federal securities laws.”

Infinity Financial had no such procedures. It conducted no such surveillance.

Between June 2019 and February 2020, the representative recommended ten variable annuity exchanges to nine clients. He also recommended two variable annuity purchases to two additional clients. In connection with these transactions, he failed to conduct comparative analyses of the benefits, fees, and costs of the old and new annuities. He failed to assess why pairing L-shares with long-term living benefit riders was appropriate for these clients. He failed to document suitability rationales.

He also provided inaccurate information. Clients were told incorrect costs, incorrect fee structures, and incorrect share class details. A registered principal at Infinity Financial reviewed and approved all twelve transactions. That principal failed to identify any of these problems. The firm had no system in place to catch them.

The collective financial harm to clients was $25,436. This figure represents the additional costs incurred due to unsuitable product features, higher fees, lost tax-advantaged withdrawal methods, and forfeited contractual benefits.

The Non-Financial Ledger

The dollar figure does not capture the anxiety. A retiree who exchanges an annuity based on false assurances does not simply lose money. They lose confidence. They lose the sense that their financial future is secure. They lose trust in the institutions they were taught to rely on.

One client held two separate accounts. Both were unsuitably exchanged. The representative convinced this person to move funds twice, incurring fees both times, for no discernible benefit. Customer 5 paid $916 on one account and $1,001 on another. These are not large sums by Wall Street standards. They are significant to someone managing a fixed retirement income.

Customer 3 paid $6,927. Customer 6 paid $4,377. Customer 9 paid $4,732. These are not rounding errors. These are months of living expenses. These are emergency funds. These are the difference between financial security and precarity in late life.

The harm extends beyond individual clients. When a firm operates without supervision, it signals to every representative in the organization that compliance is optional. It tells them that management will not notice misconduct, will not investigate red flags, and will not intervene to protect clients. It creates an environment where the incentive structure rewards volume and commissions over fiduciary duty.

The representative in this case was suspended for 12 months, fined $10,000, and ordered to pay $25,436 in restitution in a separate FINRA action in April 2025. He also was found to have made negligent misrepresentations and omissions of material fact in violation of Section 17(a)(2) of the Securities Act of 1933. He is no longer employed by Infinity Financial Services.

But he did not act alone. Every transaction he executed was approved by firm management. Every unsuitable recommendation was reviewed and cleared by a registered principal. The system did not fail because one person was dishonest. It failed because the system did not exist.

Legal Receipts

“From June 2019 to the present, the firm failed to establish and maintain a supervisory system, including WSPs, reasonably designed to surveil rates of deferred variable annuity exchanges. The firm did not establish or maintain any procedures explaining how to surveil its registered representatives’ deferred variable annuity exchange rates, including who was responsible for such surveillance, how often it would take place, what tools to use to conduct the surveillance, and what parameters to consider when evaluating whether exchange rates were inappropriate. In practice, the firm did not maintain any system for tracking rates of deferred variable annuity exchanges and no review was conducted to monitor registered representatives’ exchange rates.”
— FINRA Letter of Acceptance, Waiver, and Consent No. 2020065124802, Page 2

“The registered representative recommended 10 deferred variable annuity exchanges to nine of the firm’s customers, and also recommended that two other customers purchase deferred variable annuities, without having a reasonable basis to believe the recommendations were suitable.”
— FINRA AWC No. 2020065124802, Page 3

“In connection with these transactions, the firm’s registered principals failed to identify red flags that the deferred variable annuities may not be suitable, including that the representative recommended that the customers combine shorter term L-share deferred variable annuities with long-term living benefit riders without assessing or documenting why this combination was suitable.”
— FINRA AWC No. 2020065124802, Page 4

“Moreover, the representative failed to conduct a comparative analysis of the benefits, fees, and costs of the surrendered and replacement variable annuities, and failed to reasonably consider the customers’ loss of a tax-advantaged method for taking withdrawals.”
— FINRA AWC No. 2020065124802, Page 4

“The firm failed to detect that the representative inaccurately stated the costs, fees, and share classes of the proposed annuities.”
— FINRA AWC No. 2020065124802, Page 4

“As a result of the registered representative’s unsuitable recommendations, which Infinity approved, the customers collectively paid $25,436 in additional costs.”
— FINRA AWC No. 2020065124802, Page 4

Societal Impact Mapping

Economic Inequality

Variable annuities are sold overwhelmingly to retirees and near-retirees. These are individuals who have finished accumulating wealth and are now trying to preserve it. They are not sophisticated institutional investors. They are people who worked for decades, saved what they could, and are now vulnerable to anyone who can speak the language of financial security with confidence.

The asymmetry of information in the annuity market is profound. A representative who sells annuities for a living understands fee structures, surrender schedules, tax implications, and rider costs. A retiree who meets with that representative once or twice does not. The transaction is predicated on trust. The regulatory framework exists to ensure that trust is not exploited.

When a firm operates without supervision, it transforms that trust into a business model. Clients who cannot evaluate suitability themselves are told the transaction is in their best interest. They are shown illustrations and projections. They are reassured. They sign. The fees are extracted quietly, over years, in small increments that do not trigger immediate alarm.

$25,436 spread across nine clients is an average of $2,826 per victim. For many retirees, that sum represents a significant percentage of liquid assets. It is the difference between financial independence and dependence on family or social services. It is the difference between dignity and precarity.

The broader economic harm is diffuse but real. When financial products are sold without regard to suitability, capital is misallocated. Money that could be invested productively is instead consumed by fees. Retirement security, already fragile in an economy with disappearing pensions and inadequate Social Security benefits, is further eroded.

Public Health

Financial insecurity in retirement is a public health crisis. Studies consistently show that economic stress accelerates cognitive decline, increases rates of depression and anxiety, and shortens life expectancy. Retirees who lose money to unsuitable financial products do not simply experience a numerical loss. They experience chronic stress. They lie awake at night. They delay medical care. They ration prescriptions.

The psychological impact of financial fraud on elderly victims is well-documented. Victims report feelings of shame, self-blame, and isolation. Many do not disclose the loss to family members because they fear being perceived as incompetent or losing autonomy. The emotional toll compounds the financial harm.

In this case, nine individuals were harmed. Each of them trusted a financial professional. Each of them was betrayed. The regulatory settlement provides restitution, but it does not restore trust. It does not undo the months or years of anxiety. It does not erase the knowledge that the system designed to protect them failed.

Environmental Degradation

This case does not directly involve environmental harm. However, the failure of financial regulation contributes to broader ecological collapse. When regulatory agencies are underfunded, understaffed, or structurally incapable of deterring misconduct, the message to corporations is clear: enforcement is optional.

FINRA is a self-regulatory organization. It is funded by the industry it regulates. Its sanctions are negotiated settlements. Its fines are often a fraction of the harm caused. In this case, the fine was $25,000 and the restitution was $25,436. The total penalty to the firm, $50,436, likely represents a small percentage of the commissions generated by the unsuitable transactions.

This cost-benefit calculation is ubiquitous in corporate America. Whether the harm is financial fraud, environmental pollution, or labor violations, the logic is the same: the profit from misconduct exceeds the cost of getting caught. Until that equation changes, misconduct will continue.

The Restitution Breakdown

FINRA ordered Infinity Financial Services to pay $25,436 in restitution, distributed as follows:

The restitution is joint and several with the registered representative, who was separately sanctioned. This means victims can recover from either the firm or the individual, but not both. In practice, recovery from individuals is often difficult. The firm remains the more reliable source of payment.

FINRA required the firm to submit proof of restitution or documented efforts to locate customers within 120 days. Any unpaid amounts must be handled according to state escheatment and unclaimed property laws. This ensures that even if victims cannot be located immediately, the funds are not retained by the wrongdoer.

What Now?

Infinity Financial Services was censured, fined, and ordered to implement proper supervision. It has 180 days to certify to FINRA that it has established a supervisory system and written procedures reasonably designed to prevent annuity churning. A member of senior management who is a registered principal must submit a narrative description of the remediation and supporting evidence.

This undertaking is critical. It is also the bare minimum. The firm should have had these procedures in place since 2007, when it became a FINRA member. The fact that it operated for over a decade without them suggests institutional negligence, not an isolated oversight.

If you are a client of Infinity Financial Services or any other brokerage firm, you have the right to request a detailed breakdown of all fees, commissions, and costs associated with your variable annuity. You have the right to ask why a particular product was recommended and what alternatives were considered. You have the right to obtain copies of all account statements and transaction confirmations.

If you suspect you were sold an unsuitable annuity, you can file a complaint with FINRA, the SEC, your state securities regulator, or pursue arbitration. FINRA’s BrokerCheck tool allows you to research the disciplinary history of any registered representative or firm.

Watchlist

• FINRA (Financial Industry Regulatory Authority): Self-regulatory organization overseeing broker-dealers. File complaints and research disciplinary records at www.finra.org.
• SEC (Securities and Exchange Commission): Federal regulator with enforcement authority over securities fraud. Submit tips at www.sec.gov/tcr.
• California Department of Financial Protection and Innovation: State regulator for financial services firms operating in California.
• CFPB (Consumer Financial Protection Bureau): Federal agency handling complaints about financial products and services.

Mutual Aid and Resistance

Organize locally. Financial literacy workshops, community investment clubs, and peer-to-peer financial advice networks reduce dependence on predatory institutions. If your community does not have a financial justice organization, start one. Meet monthly. Share information. Hold advisors accountable.

Demand fiduciary standards. Call your congressional representatives and demand that all financial advisors be held to a fiduciary standard, not merely a suitability standard. A fiduciary must act in the client’s best interest. A suitability standard only requires that the product not be obviously harmful. The difference matters.

Support regulatory funding. FINRA, the SEC, and state regulators are chronically underfunded. Enforcement actions are rare and penalties are low because the agencies lack resources. Advocate for increased budgets and expanded enforcement authority. Regulations without enforcement are suggestions.

Publicize misconduct. Firms settle with regulators to avoid publicity. Break that silence. Share FINRA disciplinary actions. Name the firms. Name the executives. Make it costly to commit fraud.