The U.S. Securities and Exchange Commission was dealt a blow when one of its own administrative judges dismissed the regulator’s allegations that a Houston-based money manager failed to tell clients about a conflict of interest.
The agency, in a September enforcement action, failed to prove that Robare Group Ltd, Mark Robare and Jack L. Jones Jr. had violated securities laws, James Grimes, an SEC administrative law judge, said in a June 4 decision. The SEC alleged that Robare Group and its founders didn’t tell its clients that it received compensation from a broker for steering clients into certain mutual funds.
“We’re thrilled by the decision and think it’s appropriate. That’s why we decided to reject a settlement and go to a hearing,” said Alan Wolper, an attorney for the firm, Robare and Jones. “My clients had a hard time agreeing to a settlement in which they’d have to admit to fraud. We can’t live with that.”
The SEC is reviewing the decision, according to spokeswoman Judith Burns. The agency has 21 days from the June 4 ruling to appeal the decision.