December 31, 2025

Judge denies new trial for Jeffrey Cutter on Advisors Act violation

A Massachusetts judge rejected Jeffrey Cutter’s bid to reverse his guilty verdict on improper annuity sales. In her Dec. 23 order, Judge Denise J. Casper also denied Cutter’s request for a new trial.

Additionally, Casper set a Jan. 27 hearing to consider the Securities and Exchange Commission’s motion for a civil penalty against Cutter and Cutter Financial Group.

The SEC’s case against Cutter has been closely watched in an industry that hopes to attract more old-school advisory firms to the annuity market. Cutter is both an advisor and a licensed insurance agent, and the SEC claims he was wearing the wrong hat for many annuity sales.

In March 2023, the SEC filed charges against Cutter and CFG for “recommending that their advisory clients invest in insurance products that paid Cutter a substantial up-front commission without adequately disclosing Cutter’s and CFG’s financial incentive to sell the products.”

On April 23, a Massachusetts jury determined that Cutter and Cutter Financial Group did not violate Section 206(1) of the Investment Advisers Act of 1940, but did find a violation of Section 206(2).

Section 206(2) bars advisors from engaging “in any transaction, practice or course of business which operates as a fraud or deceit upon any client or prospective client.”

“While CFG disclosed that it received commissions from insurance companies, the jury found CFG negligent in not also disclosing the specific upfront amount of those commissions for a limited number of clients,” Cutter’s legal team said in a news release.

‘No legally sufficient basis’

One month after the split verdict, Cutter filed an appeal asking the judge to overturn the guilty verdict or give him a new trial. His legal team included a 41-page memorandum.

“Based on all the evidence presented to the jury, there is no legally sufficient basis for the jury to have found that Defendants acted negligently in their conflict-of-interest disclosures relating to selling FIAs,” the memo reads.

According to the SEC complaint, Cutter earned 7-8% commissions on annuity sales as an agent, compared to 1.5-2% fees while managing assets as a fiduciary advisor. Starting in 2014, Cutter generated more than $9.3 million in commissions from the sale of 580 annuities to his investment advisory clients, the SEC said.

In its appeal, the Cutter team pointed to testimony from an SEC lead examiner during the seven-day trial.

The SEC’s lead examiner “believes that CFG’s Form ADV disclosures regarding
conflicts of interest were appropriate,” the memo states.
The SEC’s lead examiner “confirmed the SEC issued no written guidance to investment advisers advising them to disclose annuity commission amounts or percentages, bonus programs or marketing services,” the memo states.
The SEC’s lead examiner “never advised CFG to disclose the specific amount of its FIA commissions and he conceded that Mr. Cutter was willing to do whatever the SEC examiner asked of him,” the memo adds.

Casper denied the motion in a minute order without explanation.

Stiff penalties sought

The SEC asked the court for a fine of $300,000 to $700,000 for Cutter and CFG. Additionally, the SEC wants Cutter and CFG barred from receiving any client compensation for five years unless clients are shown a copy of the civil judgment.

The SEC filed the “motion for remedies and entry of final judgment” on July 31.

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