The Securities and Exchange Commission announced fraud charges against the Robare Group in September, claiming the Houston-based firm was recommending mutual funds to clients without disclosing a conflict of interest.
On Thursday, an administrative law judge, James Grimes, dismissed the charges against the firm, writing in his decision that the SEC’s Division of Enforcement “failed to carry its burden” in proving that the firm and its owners did indeed violate Sections 206(1), 206(2) and 207 of the Investment Advisers Act of 1940.
The Robare Group has about $150 million in assets under management, according to the judge’ decision.
“From the very beginning we believed we had done nothing wrong,” Mark Robare, principal and founder of the firm, told ThinkAdvisor in an email. “We came under a lot of pressure to settle, and could have with more benign charges. At the end of the day, I still would have had to admit to items that I did not do and were not true.”
The original charges stem from an agreement between Fidelity and the Robare Group between September 2005 and September 2013, where the firm received approximately $400,000 from a revenue sharing agreement with Fidelity.
Under the agreement, the Robare Group would receive between two and 12 basis points from Fidelity when clients invested in “certain ‘eligible’ non-Fidelity non-transaction fee funds,” Grimes explained in his decision, noting that “eligible” was undefined in the agreement.