RIA Hid Fee Hikes From Clients, SEC Says

According to Raskob Kambourian's last Form ADV, the firm has 75 clients and approximately $77 million in assets under management.

Failed to Adequately Disclose Higher Fees

During the relevant period, Raskob Kambourian clients who sought financial planning and investment management services signed a "comprehensive financial planning agreement," while Raskob Kambourian clients who sought only investment management services signed an "investment management agreement," according to the suit.

The firm generated, on a monthly basis, "a Billing Summary for its clients, which set forth the calculations that ostensibly supported the fees that Raskob Kambourian charged to a particular client in a particular month," the suit states.

The fees reflected in the Billing Summary were debited from the client's custodial account at the beginning of each month.

"As a general practice, Raskob Kambourian did not send these Billing Summaries to its clients," according to the suit. "Instead, the only account statements that clients received were from third-party, brokerage account custodians who were not affiliated" with the firm.

"These statements merely noted the fee amounts debited as a single line item, with no explanation as to how those amounts were calculated," the SEC suit states.

In May 2019, Raskob Kambourian charged AUM fees and planning fees that "were greater than the amounts expressly authorized under the schedules of fees in its clients' respective agreements."

For instance, "a client with AUM of $500,000 or less who had agreed, in 2012, to pay an annualized FP Fee of $1,500 and an annualized AUM Fee of 0.75% of AUM, was, in May 2019, charged an annualized FP Fee of $3,000 and an annualized AUM Fee of 0.95% of AUM," the suit states.

"Raskob Kambourian failed to act with the level of care that a reasonable investment adviser would have under the same circumstances and was thus negligent when it failed to properly disclose to its clients that it was charging higher FP Fees and AUM Fees than were allowed in their respective CFPAs and IMAs," the SEC contends in the suit.

"A reasonable SEC-registered investment adviser would have advised its clients of such revisions to its fee schedules," the suit states.