On September 2, 2014, the SEC brought charges against The Robare Group Ltd. and its owners Mark Robare and Jack Jones, Jr. for recommending that clients invest in particular funds without disclosing that the firm was receiving compensation from the broker offering the funds. According to the SEC’s order, in 2004, Robare Group entered into an agreement with a broker that provided for the broker to compensate Robare Group for investing client assets in certain funds on the broker’s platform; however, the SEC alleges that Robare Group did not disclose this compensation arrangement to clients through its Form ADV or otherwise until 2011. The SEC further alleges that, when Robare Group did revise its Form ADV in December 2011 to disclose the compensation arrangement, the disclosures were inadequate. The SEC’s order states that Messrs. Robare and Jones, Jr. approved Robare Group’s Form ADV filings knowing that they failed to disclose or failed to adequately disclose the compensation arrangement and the related conflict of interest.
The SEC’s order alleges that Robare Group and Mr. Robare willfully violated Sections 206(1) and 206(2) of the Advisers Act, and that Mr. Jones, Jr. aided and abetted these violations. The SEC further alleges that the Robare Group and Messrs. Robare and Jones, Jr. each willfully violated Section 207 of the Advisers Act.