SEC Orders Florida-Based Investment Adviser to Repay over $500,000 to Clients for Undisclosed Conflicts and Duty of Care Violations

ADMINISTRATIVE PROCEEDING
File No. 3-22220

SEC Orders Florida-Based Investment Adviser to Repay over $500,000 to Clients for Undisclosed Conflicts and Duty of Care Violations

September 30, 2024 – The Securities and Exchange Commission today announced settled charges against Florida-based G.A. Repple & Company, a dually-registered investment adviser and broker-dealer, for breaching its fiduciary duty to clients in connection with its receipt of third-party compensation based on advisory client investments. 

According to the SEC’s order, G.A. Repple recommended or invested advisory client assets in:  (i) mutual fund share classes for which G.A. Repple received fees pursuant to Rule 12b-1 under the Investment Company Act of 1940, when lower-cost share classes of the same funds were available, (ii) cash sweep money market funds for which G.A. Repple received revenue sharing payments from its clearing broker, and (iii) no-transaction fee mutual fund investments for which G.A. Repple received revenue sharing payments from its clearing broker.  As set forth in the order, G.A. Repple failed to provide full and fair disclosure regarding its share class selection practices and conflicts of interest associated with its receipt of these payments.  In addition, the order finds that, although it was eligible to, G.A. Repple did not self-report its receipt of 12b-1 fees to the Commission pursuant to the Division of Enforcement’s Share Class Selection Disclosure Initiative.  According to the order, G.A. Repple also breached its duty of care, including its duty to seek best execution, in connection with the selection of cash sweep money market options and other mutual fund share classes for clients, and failed to adopt and implement written compliance policies and procedures reasonably designed to prevent these violations.

The SEC’s order finds that G.A. Repple violated the antifraud and compliance provisions of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder.  Without admitting or denying the findings, G.A. Repple consented to a cease-and-desist order and a censure and agreed to pay disgorgement of $356,265, with prejudgment interest of $80,424, and a civil penalty of $113,000.  G.A. Repple also agreed to distribute these funds to harmed investors and comply with certain undertakings.  

The SEC’s investigation was conducted by Erin East and supervised by Stephen Donahue of the Enforcement Division’s Asset Management Unit in the Atlanta Regional Office, and also supervised by Corey Schuster, Justin Jeffries, and Andrew Dean.  John Farinacci, an Asset Management Unit industry specialist, assisted with the investigation.