Litigation Releases (Raskob Kambourian Financial Advisors, Ltd.)

Raskob Kambourian Financial Advisors, Ltd.

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26097 / September 6, 2024

Securities and Exchange Commission v. Raskob Kambourian Financial Advisors, Ltd.

, No. 4:24-cv-00442-MSA (D. Ariz. filed September 5, 2024)

SEC Charges Investment Adviser for Failing to Disclose Fee Increases to Clients

On September 5, 2024, the Securities and Exchange Commission charged Raskob Kambourian Financial Advisors, Ltd. ("Raskob Kambourian"), a formerly SEC registered investment adviser based in Tucson, Arizona, with breaching its fiduciary duties by failing to disclose financial planning and investment management fee increases to its clients.

According to the SEC's complaint, during the period of May 2019 through July 2022, Raskob Kambourian charged its clients fees that were higher than the amounts set forth in its clients' respective agreements. The SEC alleges that Raskob Kambourian periodically increased its fees, but, as a matter of general practice, did not expressly disclose those fee increases to clients, in breach of the firm's fiduciary duties. Additionally, according to the SEC's complaint, the SEC's "brochure rule" required Raskob Kambourian to disclose each fee increase as a "material change" to its Form ADV Part 2A (the "Brochure") that the firm filed with the SEC on an annual basis. The brochure rule further required Raskob Kambourian to deliver to each client, within 120 days of the end of the firm's fiscal year, its current Brochure, or, a summary of material changes to its Brochure with an offer to deliver the full Brochure. The SEC alleges that Raskob Kambourian failed to satisfy this requirement in each year from 2019-2022. According to the SEC's complaint, Raskob Kambourian charged approximately 59 clients a total of $1,364,513 more in fees than were authorized under the fee schedules set forth in its clients' respective agreements.

The SEC's complaint, filed in the U.S. District Court for the District of Arizona, charges Raskob Kambourian with violating Section 206(2) of the Investment Advisers Act of 1940 ("Advisers Act"), as well as the record-keeping, delivery, and compliance provisions of Sections 204(a) and 206(4) of the Advisers Act and Rules 204-2, 204-3, and 206(4)-7 thereunder. Without admitting or denying the allegations, Raskob Kambourian consented to the entry of a final judgment, subject to court approval, permanently enjoining it from future violations of the charged provisions; ordering Raskob Kambourian to pay disgorgement of $1,364,513 plus prejudgment interest thereon of $256,068; and imposing a civil money penalty of $225,000.

The SEC's investigation was conducted by Robert C. Stillwell and supervised by Finola H. Manvelian of the Los Angeles office. The litigation will be led by Daniel S. Lim and supervised by Douglas M. Miller. The SEC's examination that led to the investigation was conducted by Eric Lee and supervised by Andy Sohrn and Tamara Heller.

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