Centaurus Financial Inc., an independent broker-dealer, faces losing its license in Colorado because of allegations it failed to supervise adequately the sales of structured certificates of deposit by two of its brokers.
The brokers at the center of Colorado's pending investigation, Cindy Chiellini and Ricky Mantei, are not based in Colorado but work in Lexington, S.C.
According to the Colorado notice of charges against Centaurus Financial, Ms. Chiellini and Mr. Mantei, the Colorado securities commission started its examination earlier this year "due to an unusual number of documented complaints against" Ms. Chiellini.
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Structured CDs are long-term, market-linked products that typically have terms of 10 to 20 years, or longer, according to the Colorado notice. "There are few secondary markets for these CDs, and they can be difficult to liquidate without taking a loss," the Colorado notice said.
According to BrokerCheck, Ms. Chiellini has
more than two dozen pending customer complaints. Ms. Chiellini was licensed in Colorado when the state started its examination, but she no longer is.
Mr. Mantei, her supervisor, is not licensed in Colorado and
has 10 pending customer complaints, according to BrokerCheck.
In response to one customer complaint, Mr. Mantei denied wrongdoing, according to BrokerCheck. Ms. Chiellini also denied any wrongdoing in response to a similar complaint, according to BrokerCheck.
Mr. Mantei and Ms. Chiellini did not return a call to comment.
The Colorado securities commission conducted the exam "to determine if there was a systemic root issue" that might put consumers who worked with the broker or Centaurus at risk.
Many of the customer complaints involved structured CDs, according to Colorado. The investments are alternative investments, rather than conventional stocks and bonds, that could include notes with principal protection or high-yield bonds that have lower credit ratings and higher risk of default but offer more attractive rates of return, according to Colorado.
Colorado filed the notice of its allegations late in September. A two-day hearing regarding the matter is scheduled for January.
Jerry Duhovic, chief compliance officer at Centaurus, said the firm's CEO, Ron King, was traveling and could not comment.
