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Firm Responds to SEC Suit


The Rupay-Barrington Financial Group of Arlington, Tex. issued a statement July 17 denying knowledge of a lawsuit the SEC filed against the firm accusing it of fraud. The SEC's charges were posted on its website July 12, and accuse the company of making improper loans to its affiliates resulting in inflated net asset values of its three funds. It also charges the companies with illegally suspending investor's redemptions, according to the SEC filing.

The lawsuit names Rupay-Barrington Financial Group, the funds' manager, Rupay-Barrington Capital Management, and the fund company, Rupay-Barrington Funds. Rupay-Barrington Capital Management is accused of forcing the funds to carry $250,000 worth of receivables which it knew could not be paid for by Rupay-Barrington Financial Group.

The company admits it failed to pay back the loans it made to the three funds and said its insolvency was exacerbated by a penalty the SEC levied against it earlier this year for alleged misconduct.

The company said it had previously agreed to abide by the conditions of a preliminary injunction it worked out with the SEC. The injunction requires the company to pay back all loans made to the funds and to turn them over to AIM Advisors of Houston, Tex. for liquidation. Under the order, the company neither admits nor denies any wrongdoing.

The funds had total assets of less than $4 million and two of the funds were preparing to liquidate at the time the lawsuit was filed, the company said.