Frequently Asked Questions

BACKGROUND

1. What is this matter about?

On February 6, 2023, the SEC issued an order instituting administrative and Cease-And-Desist proceedings against Centaurus Financial, Inc. (“CFI”), Ricky A. Mantei (“Mantei”), and Atul Makharia (“Makharia”), (collectively, the “Respondents”). The SEC found that between June 2016 and July 2019 (the "Relevant Period"), Makharia and seven other registered representatives from CFI's Lexington, South Carolina branch office (collectively the "CFI RRs") recommended the sale of variable interest rate structured products (“VRSPs”) to ninety-four retail customers (“Specified Customers”) for whom such investments were unsuitable in light of each of the specific customers' financial situation and needs. The CFI RRs made these recommendations even though they knew, or reasonably should have, that the VRSP’s were unsuitable to these Specified Customers. CFI and Mantei also failed reasonably to supervise the CFI RRs. For his part, Mantei failed reasonably to follow CFI's then existing customer-specific suitability review procedures and review every proposed structured products transaction, including all VRSPs transactions. Additionally, from June 2016 to July 2019, CFI failed to make and keep certain required records relating to certain customer accounts. During this period, CFI electronically recorded certain customer accounts information required under the Exchange Act Rule 17a-3(a)(17), including the customer’s name, tax identification numbers, date of birth, employment status, annual income, net worth, and investment objectives. In some instances, CFI failed to maintain and preserve this information for at least six years and also failed to make and keep current records as required by the Exchange Act.

The Respondents submitted Offers of Settlement (the “Offers”) which the SEC accepted. The SEC ordered CFI to pay disgorgement of $4,876.00, prejudgment interest of $623.00 and a civil money penalty of $750,000.00; Mantei to pay disgorgement of $92,650.00, prejudgment interest of $11,842.00 and a civil money penalty of $206,000.00; and Makharia to a pay civil money penalty in the amount of $35,000.00, all in the total amount of $1,100,991.00. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, the SEC also created a Fair Fund for the disgorgement, prejudgment interest, and penalties (the “Fair Fund”) to be distributed to harmed investors.

The Centaurus Fair Fund is comprised of the $1,100,991.00 paid by the Respondents. The Fair Fund has been deposited in a SEC-designated account at the U.S. Department of the Treasury, and any accrued interest will be added to the Fair Fund.

On March 11, 2024 the SEC issued an order appointing Miller Kaplan Arase LLP, as the Tax Administrator of the Fair Fund. On November 5, 2024, the SEC issued an order appointing Simpluris Inc. (“Simpluris”), as the Fund Administrator to oversee the administration and distribution of the Fair Fund and set the administrator’s bond amount.

On April 16, 2024, the SEC published a notice of the proposed plan of distribution and opportunity for comment and simultaneously published the proposed plan of distribution (“Proposed Plan”). On June 17, 2024, the SEC issued an order approving the Proposed Plan and simultaneously posted the approved Plan of Distribution (the “Plan”).

2. Why did I receive a Plan Notice?

You received a Plan Notice because you have been identified by the Fund Administrator as a person or entity who purchased or acquired Variable Interest Rate Structured products (the “Security”) during the period from June 1, 2016, through July 31, 2019, inclusive.

3. What is the Relevant Period?

The Relevant Period is from June 1, 2016, through July 31, 2019, inclusive.

4. How much is in the Centaurus Fair Fund?

The Fair Fund consists of the $1,100,991.00 paid by the Respondents plus accrued interest.

ELIGIBILITY

5. Who is eligible for a potential payment from the Centaurus Fair Fund?

You may be eligible for a payment from the Centaurus Fair Fund if:

1. You purchased or acquired the Security during the Relevant Period;


2. Your approved transactions calculate to a Recognized Loss equal to or greater than the Minimum Distribution Amount of $10.00, as calculated under the Plan;


3. You are not an Excluded Party; and


4. You timely submitted a valid Certification Form.

In order to be considered for eligibility for a distribution payment from the Centaurus Fair Fund, you must complete and submit a Certification Form by February 27, 2025 (the “Certification Form Deadline”) in order to receive a potential payment.

6. Who is excluded from payment from the Centaurus Fair Fund?

You are excluded from participation in the Centaurus Fair Fund if you are an Excluded Party as defined in the Plan, including:

1. The Respondents (Centaurus Financial, Inc.), and Respondents’ officers and directors, employees, promoters, independent contractors, agents, nominees, assigns, creditors, heirs, distributes, spouse, parents, children or controlled entities;


2. The Fund Administrator, its employees, and those Persons assisting the Fund Administrator in its role as the Fund Administrator; and,


3. Any purchaser or assignee of another Person’s right to obtain a recovery from the Fair Fund for value; provided, however, that this provision shall not be construed to exclude those Persons who are eligible due to a gift, inheritance, or devise.

PLAN OF ALLOCATION

7. What is the Plan of Allocation?

The Plan of Allocation is designed to compensate investors based on their losses, due to the misconduct of Centaurus, on the purchase or acquisition of Variable Interest Rate Structured products during the Relevant Period. An investor who did not purchase or acquire the Security during the Relevant Period, or who is an Excluded Party, is ineligible to recover under the Plan. An investor who is not an Excluded Party under paragraphs12(a)-(c) of the Plan, who submits a valid Certification Form, and who has suffered a Recognized Loss as calculated by the Plan of Allocation, will be deemed an Eligible Claimant. An Eligible Claimant whose Recognized Loss calculates to a distribution amount equal to or greater than $10.00 and who is not an Excluded Party under paragraph 12(a)-(c) of the Plan will be deemed a Payee.

THE CERTIFICATION PROCESS

8. What is the deadline to submit a Certification Form?

The deadline to submit a Certification Form, also referred to as the “Certification Form Deadline” is February 27, 2025.

Certification Forms completed online must be submitted on or before 11:59 p.m. Eastern Standard Time on February 27, 2025.

Certification Forms submitted by mail must be sent to the address provided on the Certification Form and postmarked (or if not sent by U.S. Mail, received) by February 27, 2025.

9. What do I need to submit a Certification Form online?

Online submissions are encouraged.

To submit a Certification Form online, click here and follow the instructions provided.

Certification Forms completed online must be submitted on or before 11:59 p.m. Eastern Standard Time on February 27, 2025.

If you submit a Certification Form that fails to provide all required information, or is otherwise deficient, you will receive a Claim Status Notice advising you of the reason(s) why the certification form is deficient and telling you how to cure such deficiencies.

10. What do I need to submit a Certification Form via mail?

If you are unable to submit a Certification Form online, you may request a copy of the paper Certification Form from the Fund Administrator via email at info@CentaurusFairFund.com or by calling 866-675-2467.

Certification Forms submitted by mail must be sent to the address provided on the Certification Form and postmarked (or if not sent by U.S. Mail, received) by February 27, 2025.

If you submit a Certification Form that fails to provide all required information, or is otherwise deficient, you may receive a Claim Status Notice advising you of the reason(s) why the certification form is deficient and of the opportunity to cure such deficiencies.

11. How will I find out about the outcome of my Claim?

The Fund Administrator will send a Claims Status Notice to claimants with deficient claims and/or claims that will be denied, explaining how the claimant can cure deficiencies or seek reconsideration.

The Fund Administrator will send a Determination Notice to claimants, advising each claimant who timely submitted a Certification Form of their eligibility determination, and will further provide to those determined to be an Eligible Claimant with their calculated Recognized Loss. The Fund Administrator may consider disputes of an Eligible Claimant’s Recognized Loss calculation if timely presented in accordance with the Plan.

Subject to consideration of an Eligible Claimant’s Recognized Loss calculation provision of paragraphs 46, the Determination Notice will constitute the Fund Administrator’s final ruling regarding the eligibility status of a claim.

DISTRIBUTION

12. When will Distribution Payments be disbursed?

There is no current estimate for when Distribution Payments will commence although the Fund Administrator, working with the SEC, hope to stay within the deadlines provided in the Plan. Please visit this website often to get the most up-to-date information.

ADDITIONAL INFORMATION

13. Who is the Tax Administrator?

On March 11, 2024, the Commission issued an order appointing Miller Kaplan Arase LLP, as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-99590.

14. Who is the Fund Administrator?

On November 5, 2024, the Commission issued an order appointing Simpluris Inc. (“Simpluris”), as the Fund Administrator to oversee the administration and distribution of the Fair Fund and, set the administrator’s bond amount. See the SEC’s Order: Release No 34-101512.

15. Where can I get additional information?

Copies of the Plan, the Notice, the Certification Form, and other relevant documents are available for download on the Important Documents page of this website and through the SEC’s website for this matter.

If you would like to request a copy of the Plan, the Plan Notice, and/or the Certification Form, or if you have any other questions, you may contact the Fund Administrator via email at info@CentaurusFairFund.com, or by calling 866-675-2467. The mailing address for the Fund Administrator is: Centaurus Fair Fund, Fund Administrator, P.O. Box 25415, Santa Ana, CA 92799.