Advisor Fights SEC in Annuity Switching Case

The Massachusetts advisor who was charged by the Securities and Exchange Commission in March with defrauding clients as part of an annuity replacement scheme requested that the case be dismissed, arguing that, among other things, he was acting as an insurance agent and not an advisor, which means he didn’t violate the Investment Advisers Act of 1940.

In a complaint filed March 17 in U.S. District Court for the District of Massachusetts, the SEC alleged Jeffrey Cutter, 55, and his firm, Cutter Financial Group, recommended their advisory clients invest in fixed indexed annuities that paid Cutter a significant upfront commission without adequately disclosing his and CFG’s financial incentive to sell those products.

The complaint also alleged that Cutter recommended some clients surrender fixed indexed annuities the client already owned, including fixed indexed annuities he had sold the clients previously.

The scheme allegedly caused the clients to incur a total of $640,000 in surrender charges between 2018 and 2022.