The allegations read: The sec deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted against centaurus financial, inc. ("centaurus" or "cfi"), ricky a. Mantei, and atul makharia (collectively "respondents"). In anticipation of the institution of these proceedings, respondents have submitted offers of settlement (the "offers") which the commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the commission, or to which the commission is a party, and without admitting or denying the findings herein, except as to the commission's jurisdiction over them and the subject matter of these proceedings, which are admitted, and except as provided herein, respondents consent to the entry of this order instituting administrative and cease-and-desist proceedings, making findings, and imposing remedial sanctions and a cease-and-desist order ("order"). On the basis of this order and respondents' offers, the commission finds that makharia and other registered representatives from cfi's lexington, south carolina branch office (the "cfi rrs") recommended vrsps to retail customers for whom such investments were unsuitable in light of each of the specific customers' financial situations and needs (the "specified customers"). Makharia and the other cfi rrs made these recommendations even though they knew, or reasonably should have known, among other factors, that the specified customers to whom these vrsps were recommended: were at or approaching retirement age; had an annual income of less than $100,000; in most cases, had a net worth of less than $500,000; had a low or moderate risk tolerance; had investment objectives that included, or were limited to, "income" and sought periodic interest payments; had moderate or high liquidity needs; had an investment time horizon of less than fifteen years; and were unwilling to risk losing all or some of their principal invested in the vrsps. By making unsuitable recommendations of vrsps to the specified customers, makharia and cfi violated sections 17(a)(2) and 17(a)(3) of the securities act. Respondent mantei, the branch manager and owner of cfi's lexington branch, caused these violations. Cfi and mantei also failed reasonably to supervise the cfi rrs with a view to preventing and detecting their violations of sections 17(a)(2) and 17(a)(3) of the securities act arising from the unsuitable recommendations of vrsps to the specified customers. Cfi failed reasonably to implement its customer-specific suitability procedures to determine whether the cfi rrs were making the required suitability determinations prior to recommending vrsps to the specified customers and that mantei was following the procedures. For his part, mantei failed reasonably to follow cfi's then existing customer-specific suitability review procedures. Additionally, cfi failed to make and keep certain required records relating to certain customer accounts. In some instances, cfi, however, failed to maintain and preserve this information for at least six years in violation of exchange act section 17(a) and rules 17a-4(e)(5) thereunder, and in a nonrewritable and non-erasable format in violation of exchange act section 17(a) and rule 17a4(f)(2) thereunder. Further, cfi failed to make and keep current a record indicating that, for each change in a customer's account investment objectives, cfi furnished the customer with a copy of the updated account record or alternative document containing the information required by rule 17a-3(a)(17) within thirty days of cfi receiving notice of any change, in violation of exchange act section 17(a) and rule 17a-3(a)(17)(i)(b)(3) thereunder.
