SEC Investigates Atul Makharia

Atul Makharia (CRD #: 5070762), a broker registered with Centaurus Financial, was the subject of an SEC investigation, according to his BrokerCheck record, accessed on August 28, 2022. If you have questions about his conduct as a broker, keep reading.

SEC Investigation

On June 28, 2022, Atul Makharia received a Wells Notice from the SEC proposing regulatory action pertaining to the sales of curve steepener securities, alleging that he violated the Section 17(a) of the Securities Act of 1933, as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

Curve steepeners speculate on how short-term vs. long-term bond interest rates will change. A steeper curve might mean higher returns for investors.

The proposed action would also allege that Atul Makharia aided and abetted or caused violations by Centaurus Financial of Section 17(a) of the Securities Exchange Act and Rule 17a-3(a)(17)(i)(B)(3) thereunder.

What is a Wells Notice?

A broker receives a Wells Notice when the SEC is proposing charges against them. The letter allows brokers the chance to respond to the allegations.

Securities Act of 1933

Section 17(a) of the Securities Act of 1933 prohibits the use of deceptive and fraudulent schemes in the business of buying or selling securities across state lines. It specifically bans false or misleading statements and the omission of material facts relating to securities.

Securities Exchange Act of 1934

Section 10(b) of the Securities Exchange Act of 1934 forbids the use of manipulative or deceptive devices in relation to the purchase or sale of securities. Rule 10b-5 extends this to include fraudulent schemes, untrue statements, and omissions of fact.

Section 17(a) requires brokerage firms and other organizations to meet certain recordkeeping requirements. Rule 17a-3(a)(17)(i)(B)(3) requires brokers and dealers, and other members of national securities exchanges to provide clients with updated documentation when an account’s investment objectives change within 30 days.

Investor Disputes

On June 15, 2020, an investor alleged that Atul Makharia overconcentrated their account(s) in unsuitable investments. The client sought $100,000 and received a settlement of $70,000.

In a dispute filed on March 16, 2020, an investor alleged that Atul Makharia overconcentrated her in unsuitable, high-risk, speculative, and illiquid investments from 2017-2018. The client sought $150,000 and received a settlement of $57,500.

Six other disputes, filed from 2018-2020, similarly alleged that Atul Makharia recommended or invested clients in unsuitable investments. These disputes were collectively resolved for $159,930. 

FINRA Rule 2111

FINRA Rule 2111 requires brokers to recommend investments and investment strategies that adequately fit their client’s profiles. Investors’ profiles describe their risk tolerance, tax status, and investment goals.

Investors who rely on their broker for recommendations may be able to recoup their losses by seeking out FINRA arbitration.

Background Information

Atul Makharia has passed the following exams:

• Series 63 – Uniform Securities Agent State Law Examination
• SIE – Securities Industry Essentials Examination
• Series 7 – General Securities Representative Examination

Atul Makharia is a registered broker in 12 states.

He has also worked for the following firms:

• J.P. Turner & Company (CRD#:43177)
• GunnAllen Financial (CRD#:17609)
• First Allied Securities (CRD#:32444)

Kurta Law Can Help

If you worked with Atul Makharia and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.