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CFP Board News - June 2006


REPORT ON MAY 2006 BOARD OF GOVERNORS MEETING

CFP Board's governing body, the Board of Governors (the Board), met May 17-19, 2006 in closed session in Washington, D.C.

In addition to its regular review of CFP Board's mission and the activities that further that mission, the Board received updates from CFP Board's Board of Examiners, from CFP Board's Board of Professional Review and updates from staff, ranging from the current financial status of CFP Board to the applicants selected as finalists for CFP Board's 2006 Financial Planning Grants Program.

Much of the Board's meeting focused on enhancements to the Ethics requirement for initial and ongoing CFP® certification. The Board approved "Character and Fitness Standards for Candidates" (Fitness Standards) that will provide clarification to those seeking CFP® certification regarding the types of past experiences that will bar or are likely to bar one from becoming a CFP® certificant. The Fitness Standards were approved with an effective date of January 1, 2007, and will be released publicly in the coming weeks.

The Board also reviewed the proposed revisions to CFP Board's Code of Ethics and Professional Responsibility and Financial Planning Practice Standards that have been in development since 2004. The proposed revisions were designed to retain CFP Board's core ethical standards and present them in a way that provides both CFP® professionals and consumers with clear expectations of the ethical standards that apply to a financial planning engagement. Several suggestions were made by Board members, and those suggestions will be incorporated into the draft before it is released publicly for comment. The Board anticipates holding a public forum to receive comments on the proposed revisions at CFP Board's Annual Meeting in Santa Monica and Los Angeles during the first week of August 2006.

The next meetings of the Board will take place at CFP Board's Annual Meeting in Santa Monica and Los Angeles from August 1-5, 2006, including a meeting open to the public on Saturday, August 5.

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IRS REGISTERS WITH CFP BOARD AS CONTINUING EDUCATION SPONSOR

CFP Board welcomes the Internal Revenue Service (IRS) as a registered continuing education (CE) sponsor. Twenty-four of the 36 seminars offered at the 2006 Nationwide Tax Forums presented by the IRS are accepted by CFP Board for CE credit.

There are currently more than 2100 CE sponsors registered with CFP Board. To find out if a CE sponsor is registered, visit our Web site at www.CFP.net/sponsors.

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CHANGES TO CFP BOARD'S DISCIPLINARY RULES AND PROCEDURES

CFP Board's Board of Governors approved at its May 2006 meeting several changes to CFP Board's Disciplinary Rules and Procedures that help clarify the functioning of the process CFP Board uses to investigate allegations of unethical behavior. The changes affect the following Articles:

Article 6.3: A sentence was added to the end of the Article, noting that CFP Board may reserve the right to reopen investigations of matters that are dismissed before a hearing is held.

Article 7.3: Outdated references to "copies" of an Answer to Complaint were removed from the Article; CFP Board requires that an original Answer to Complaint be filed with CFP Board, and CFP Board staff copies that original and forwards the copies to the Hearing Panel.

Article 13.3: A procedure for the Board of Professional Review to counter a proposed Offer of Settlement was added to the Article.

Article 15.4: Individuals whose CFP® certification is suspended for more than one year may petition for reinstatement only twice. The Article was revised to clarify the specific time limitations for initiating any second petition.

Article 17.3: Refunds of hearing costs are limited to cases where the Board of Professional Review finds the case to be without merit. The Article was revised to make such a refund automatic when a dismissal without merit is issued, rather than requiring that the refund be requested prior to hearing.

The cost of a hearing before a Hearing Panel of the Board of Professional Review also was recently increased to $750.

The updated text of the revised Articles of CFP Board's Disciplinary Rules and Procedures is available for download at www.CFP.net/certificants/conduct.asp.

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CFP BOARD DISCIPLINARY ACTIONS

CFP Board recently took the public disciplinary actions listed below. Public disciplinary actions taken by CFP Board, in order of decreasing severity, include permanent revocation of an individual's right to use the CFP® certification marks, suspension of the right to use the CFP® certification marks for up to five years, and letters of admonition.

These disciplinary actions were taken by the Board of Professional Review, a board of CFP® certificants that interprets and applies CFP Board's Code of Ethics and Professional Responsibility and Financial Planning Practice Standards as well as investigates, deliberates and takes appropriate action with respect to alleged violations. Consumers can use CFP Board's Web site to check on a planner's disciplinary history and certification status with CFP Board.

Letter of Admonition

CALIFORNIA
Ralph C. Williams (Lancaster): In July 2005, CFP Board issued a Letter of Admonition to Mr. Williams after the Board of Professional Review (Board) found that Mr. Williams' broker/dealer paid his client $40,000 in settlement of his claims against Mr. Williams and the company, to which Mr. Williams was required to personally contribute $5,000. The Board also found that Mr. Williams engaged in unauthorized transactions that resulted in the client's losses and that Mr. Williams was terminated by his broker/dealer for violating firm policy when he engaged in the unauthorized transactions. The Board determined to publish the letter of admonition only after Mr. Williams successfully passed the CFP® Certification Examination and completed six additional continuing education credits, which Mr. Williams did in May 2006.

Suspensions

RKANSAS
Carla L. Chastain (Rogers): In April 2006, CFP Board suspended Ms. Chastain's right to use the CFP® certification marks for one year, effective from April 21, 2006 through April 21, 2007. After a hearing, the Board of Professional Review found that Ms. Chastain entered into a Consent Order with the Arkansas Securities Department that included conclusions of law stating that she: 1) willfully recommended to various clients the purchase, sale or exchange of securities when she did not have reasonable grounds for believing the transactions were suitable for the clients on the basis of information disclosed by the clients regarding their investment objectives, financial situations and needs; and 2) willfully induced trading in various clients' accounts that was excessive in size and frequency in view of the clients' financial resources, investment objectives and character of their accounts. Pursuant to the Consent Order, Ms. Chastain's Investment Advisor Registration was revoked, her registration as an Agent was suspended for 180 days, she was required to retake the Series 7 examination, and she was fined $100,000.

COLORADO
William Alan Gay (Greenwood Village): In March 2006, CFP Board issued an Order of Interim Suspension to Mr. Gay with respect to his December 2005 indictment on four felony counts, including theft from an at-risk victim, conspiracy to commit theft from an at-risk victim, securities fraud through an untrue statement or omission, and conspiracy to commit securities fraud through an untrue statement or omission. Due to the seriousness of the matter and the related media publicity, in January 2006, CFP Board issued Mr. Gay an Order to Show Cause requiring him to provide evidence why his right to use the CFP® certification marks should not be suspended during CFP Board's investigation. After a hearing, the Board of Professional Review determined that Mr. Gay failed to provide sufficient evidence that his right to use the CFP® certification marks should not be suspended, and accordingly, his right to use the CFP® certification marks was suspended immediately, until further notice.

NEW YORK
James J. Reilly (Mamaroneck): In April 2006, Mr. Reilly entered into a settlement agreement with CFP Board, pursuant to which he consented to a finding that he failed to disclose his involvement in eight arbitrations on his Certification Renewal Application, in violation of CFP Board's Code of Ethics and Professional Responsibility. Mr. Reilly consented to a suspension of his right to use the CFP® certification marks for one year and one day, effective from April 11, 2006 through April 12, 2007.

OHIO
Richard A. Daniels (Chagrin Falls): In May 2006, CFP Board issued an Order of Interim Suspension to Mr. Daniels with respect to his February 2006 suspension by the Ohio Division of Securities and his March 2006 indictment on one felony count of securities fraud. Both incidents related to his alleged misappropriation of approximately $2 million from several of his clients by placing the clients' funds in a corporate checking account he controlled and then using the funds for his own purpose. Due to the seriousness of the matter and the related media publicity, in April 2006, CFP Board issued Mr. Daniels an Order to Show Cause requiring him to provide evidence why his right to use the CFP® certification marks should not be suspended during CFP Board's investigation. Mr. Daniels failed to respond to the Order within the required time frame, and accordingly, his right to use the CFP® certification marks was suspended immediately, until further notice.

TEXAS
Kyle Holland (Austin): In April 2006, CFP Board suspended Mr. Holland's right to use the CFP® certification marks for one year and one day, effective from April 22, 2006 through April 23, 2007. After a hearing, the Board of Professional Review found that Mr. Holland entered into a Letter of Acceptance, Waiver and Consent with NASD, wherein he consented to the entry of findings that 1) Mr. Holland was the Chief Financial Officer for an NASD member firm; 2) a bank president presented a "cashier's check" for $2.8 million to the firm appearing to be drawn on a domestic bank account but also indicating that the bank maintained an office offshore; 3) the bank president withdrew $901,654 from the firm account and transferred those funds to third parties; 4) the $2,800,000 check was returned and the customer's account maintained an unsecured debit balance of $835,537; 5) the firm entered into a settlement agreement with its clearing house, wherein the clearing house agreed to take responsibility for the customer's unsecured debit balance and the firm agreed to pay the clearing house an additional $500,000 in check clearing fees payable over five years; 6) he failed to ensure that the firm included the $500,000 settlement as a liability of the firm; 7) he filed inaccurate reports with NASD because such reports significantly overstated the firm's net capital position and failed to give NASD notice of the firm's net capital deficiencies; and 8) he engaged in private securities transactions for which he earned commissions and failed to give his firm prior notice of these transactions. Mr. Holland consented to the imposition a fine of $25,000 and a suspension from association with any NASD member in all capacities for one month and in any principal capacity for three months.

UTAH
Michael C. Hirschi (Sandy): In April 2006, Mr. Hirschi entered into a settlement agreement with CFP Board, pursuant to which he consented to a finding that he violated CFP Board's Code of Ethics and Professional Responsibility by permitting an employee to conceal documents from internal inspectors during an internal review. Mr. Hirschi consented to a three-month suspension of his right to use the CFP® certification marks, effective from April 24, 2006 through July 24, 2006.

WASHINGTON
David A. Duryee (Seattle): In March, 2006, Mr. Duryee entered into a settlement agreement with CFP Board, pursuant to which he consented to findings that he failed to exercise proper diligence over an extended period of time and failed to keep CFP Board informed of the details of a settlement as required, in violation of CFP Board's Code of Ethics and Professional Responsibility. Mr. Duryee consented to a three-month suspension of his right to use the CFP® certification marks, effective from March 31, 2006 through June 30, 2006.

Revocations

OHIO
Darrel E. DeMarco (Tallmadge): In March 2006, CFP Board permanently revoked Mr. DeMarco's right to use the CFP® certification marks after he failed to respond to CFP Board's Complaint investigating a Letter of Acceptance, Waiver and Consent (AWC) he entered into with NASD wherein Mr. DeMarco consented to findings that he forged the name of an official of his member firm on a corporate resolution guaranteeing that the firm would stand behind automobile loans and leases entered into by an automobile dealership with professional athletes Mr. DeMarco hoped to attract as customers. As part of the AWC, Mr. DeMarco also consented to findings that he signed the corporate resolution without the knowledge, consent or authorization of his firm or the firm's official whose purported signature appeared on the resolution. Pursuant to the AWC, Mr. DeMarco was barred from association with any NASD member in any capacity. Because Mr. DeMarco failed to respond to CFP Board's Complaint, the allegations in the Complaint were deemed admitted and an order of revocation was issued.

TEXAS
Solomon O. Onita (Houston): In January 2006, CFP Board permanently revoked Mr. Onita's right to use the CFP® certification marks after he failed to respond to CFP Board's Complaint investigating his unauthorized use of the CFP® certification marks for at least two years after his certification expired. Because Mr. Onita failed to respond to CFP Board's Complaint, the allegations in the Complaint were deemed admitted and an order of revocation was issued.

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VOLUNTEERS NEEDED FOR LOS ANGELES FIELD TEST AND FINANCIAL PLANNING CLINIC

FIELD TEST VOLUNTEER OPPORTUNITIES

CFP Board seeks CFP® certificants to assist with a Field Test to be held in Los Angeles on Friday, August 4, 2006.

During a Field Test, CFP® certificants take a shortened version of the CFP® Certification Examination (only 2 hours) and then provide comments to CFP Board in an additional 2-hour discussion period. Participants earn 4 CE hours for their participation. Early registration is required, as space is limited to 25 participants.

The Field Test will take place on August 4, 2006, from 1:00 p.m. to 5:00 p.m. at the Los Angeles Convention Center.

If you have an interest in becoming involved in the creation of future CFP® Certification Examinations, please visit our Web site at www.CFP.net/signup to learn more and register to assist with the Field Test.

FINANCIAL PLANNING CLINIC VOLUNTEER OPPORTUNITIES

CFP Board also invites you to join a growing group of first-rate CFP® certificants who will staff a Financial Planning Clinic on Friday, August 4, 2006, during the General Session of CFP Board's Annual Meeting at the Los Angeles Convention Center.

The clinic will allow attendees of the General Session the opportunity to hold informal conversations with volunteer CFP® certificants at tables designated for certain financial subjects. There will be no sale of investment products or services at the clinic, and while contact information for the volunteers will be included in materials presented to clinic attendees, volunteers will not be permitted to hand out promotional information during the clinic. We expect the clinic will be the first chance many attendees have the chance to speak one-on-one with a financial planning professional - the clinic should prove to be a rewarding experience for all involved.

A three-hour time commitment is required, and CFP Board will provide clinic volunteers with free admission to General Session, including admission to continuing education sessions and the lunch presentation by Hank McKinnell, CEO of Pfizer, Inc. Only CFP® certificants in good standing with CFP Board can participate.

If you can help with the Financial Planning Clinic, please contact CFP Board by e-mail at annualmeeting@CFPBoard.org or by phone at 800-487-1497 with the following information:

  • Name
  • Mailing Address
  • E-mail Address
  • Phone Number
  • Any specific financial planning topics you would be interested in discussing with Financial Planning Clinic attendees.
  • If you are multi-lingual, the languages you would be willing to use during the Financial Planning Clinic.

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