Court fines Cutter Financial Group for violation of federal law.

A federal court judge in Boston has ordered civil penalties totaling $150,000 against financial adviser Jeffrey Cutter and his Falmouth-based company for failing to disclose conflict of interests in the sale of annuities.

US District Court Judge Denise Casper’s order comes after an April 23, 2025, jury verdict found Cutter and Cutter Financial Group guilty of violating one section of the Investment Advisers Act of 1940 (Section 206(2)). The jury found that Cutter and his firm failed to disclose information about commissions and conflicts of interest to hundreds of clients, citing ‘negligence’ rather than intent.

That same jury found for Cutter and Cutter Financial Group on two other SEC allegations.

In her Feb. 10 decision, Casper ordered Cutter and Cutter Financial to pay $50,000 and $100,000 respectively in civil penalties in the case brought by the federal Securities and Exchange Commission. Under the judge’s order, Cutter Financial Group must also provide a copy of the April 23, 2025, verdict to existing clients within 30 days and prospective clients for the next five years.

Cutter Financial Group provides investment advice and sells Fixed Income Annuities from Cutterinsure.  As financial advisers, its duty is to its clients first and foremost.

The SEC alleged in its original complaint that Cutter “engaged in a pattern ofdeception designed to steer his investment advisory clients to certain insurance products overother investment options, while concealing his financial motive to do so in breach of hisfiduciary duties as an investment adviser.”

According to the SEC, the annual, asset-based fee CFG charged was approximately 1.5%-2% of the client’s assets managed by CFG. For annuity sales through Cutterinsure, up-front commissions ranged from 7%-8% of the annuity’s total value. The SEC claimed that information wasn’t fully disclosed.

Cutter and CFG disputed that.

After the April verdict, Cutter issued press releases claiming he and his company had been cleared by the jury. Then Cutter and the firm appealed the jury decision regarding Section 206(2). In a response to the commission’s motion for final judgment, the defendants argued that they “disclosed their conflict of interest… that their conflict-of-interest disclosure was consistent with existing SEC guidance and industry standards.”

The SEC claimed the defendants “victimized hundreds of retirees and near-retirees who did not receive full and fair disclosure of the conflict of interest presented by Cutter’s FIA compensation,” according to a court document.

The defendants earned $14,982,675 in advisory fees and $9,340,273 in undisclosed up-front commissions in connection with the misconduct at issue,” according to court documents.

Calls to lawyers for the SEC and CFG weren’t immediately returned.

Denise Coffey writes about business, tourism and issues impacting the Cape’s residents and visitors. Contact her at dcoffey@capecodonline.com . 

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