© 2015 The Texas Lawbook.
By Natalie Posgate
(June 5) – An administrative law judge for the U.S. Securities & Exchange Commission has exonerated Houston-based Robare Group and two of its executives of all charges the agency brought against them last September.
After a three-day bench trial that occurred in Houston in February, ALJ James E. Grimes found Thursday that Robare, a wealth management and financial planning firm, did not violate securities laws and validated the adequacy of the firm’s disclosure methods.
The SEC claimed that Robare failed to disclose a conflict of interest to its clients when it recommended they invest in particular mutual funds and in turn received compensation from the broker that was selling the funds.
Fort Worth SEC attorney Janie Frank, who led the litigation for the government, could not be immediately reached for comment.
Chicago attorney Alan Wolper, who represented the defendants, wrote in a blog post that Judge Grimes’ decision is significant because it goes against the status quo of ALJ decisions, which have the reputation for being pro-SEC.
“Congratulations to my clients for having the bravery to take this case to a hearing, even knowing the massive statistical hurdle they faced by having the SEC bring it as an Administrative Proceeding, and also given the fact [that] they could have settled for charges much more benign than those the SEC ultimately included in the order instituting proceedings,” Wolper wrote.
Wolper also said in his post that Judge Grimes made “several pertinent findings” in his decision, including:
• Disclosures by advisors to customers and prospective customers may appear in documents other than just Form ADV.
• The defendants reasonably relied on advice they received over the years from several trusted sources regarding their disclosures.
• Robare never made any investment decisions on behalf of their customers that were influenced by a desire to receive compensation from the broker, Fidelity.
Click here to read Mr. Wolper’s blog post, here for Judge Grimes’ decision, and here for The Texas Lawbook’s previous coverage on the SEC’s charge.
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