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Certification Updates

CFP Board Censures Improper CFP® Certificant Conduct

Jan 30, 2007

DENVER, January 30, 2007 - Certified Financial Planner Board of Standards Inc. today announced public disciplinary actions against the following individuals' rights to use the CFP® certification marks, effective immediately.

STATE NAME LOCATION DISCIPLINE
Arkansas Henry H. Godbee III Little Rock Letter of Admonition
California Garry A. Estrada Murrieta Suspension
  Eric C. Howie Santa Clara Delay of Certification
Delaware William R. Barto Hockessin Revocation
Georgia John T. Carter Macon Letter of Admonition
Illinois Timothy J. Stearns Arlington Heights Letter of Admonition
Michigan John R. Hantz Southfield Letter of Admonition
  Carl P. Kellogg Ada Permanent Relinquishment
Missouri Christopher J. Jacob St. Louis Letter of Admonition
New Jersey Robert M. Ryerson Freehold Letter of Admonition
New York Frank P. Grasso Sayville Suspension
  Kenneth L. Sojka New Rochelle Suspension
Tennessee Edward Alan Martin Franklin Permanent Relinquishment
Texas Sidney J. Lorio Bedford Letter of Admonition
Wisconsin Thomas Van Tassel Sparta Permanent Relinquishment

Public disciplinary actions taken by CFP Board, in order of decreasing severity, include permanent revocation, suspension and letters of admonition. Under terms of the revocation and permanent relinquishments, William R. Barto, Carl P. Kellogg, Edward Alan Martin and Thomas Van Tassel no longer have the right to use the CFP® marks. The rights of Garry A. Estrada and Kenneth L. Sojka to use the CFP® marks were suspended for one year and one day, and the right of Frank P. Grasso to use the CFP® marks was suspended for nine months. Eric C. Howie’s application to use the CFP® marks was delayed for 30 days. CFP Board issued Letters of Admonition to John T. Carter, Henry H. Godbee III, John R. Hantz, Christopher J. Jacob, Sidney J. Lorio, Robert M. Ryerson and Timothy J. Stearns; they retain the right to use the CFP® marks.

The basis for each decision can be found in the report below. Consumers can check on a planner's disciplinary history and certification status with CFP Board on the Web site.

DISCIPLINARY ACTION REPORT
January 2007

Public Letters of Admonition

ARKANSAS

Henry H. Godbee III (Little Rock): In November 2006, CFP Board issued Mr. Godbee a Letter of Admonition after its investigation of an NASD inquiry. After a hearing, the Board of Professional Review (Board) found that Mr. Godbee was terminated from his firm for failing to follow firm procedures related to the exercise of discretion in client accounts without the firm’s written approval. The Board also found that Mr. Godbee entered into a Letter of Acceptance, Waiver and Consent (AWC) with NASD whereby he consented, without admitting or denying the allegations, to findings that he exercised discretion in the accounts of 53 customers without prior written authorization from his firm and despite written notification from his firm to stop exercising discretion in client accounts. Pursuant to the AWC, Mr. Godbee agreed to accept a suspension of his NASD registration in all capacities for 60 days and a $10,000 fine.

GEORGIA

John T. Carter (Macon): In November 2006, Mr. Carter entered into a settlement agreement with CFP Board, pursuant to which he consented to findings that he copied a customer’s name onto a letter of direction, in violation of CFP Board’s Code of Ethics and Professional Responsibility, and that he failed to notify CFP Board of his professional suspension within ten calendar days as required. As part of the settlement, CFP Board issued Mr. Carter a Letter of Admonition.

ILLINOIS

Timothy J. Stearns (Arlington Heights): In December 2006, Mr. Stearns entered into a settlement agreement with CFP Board, pursuant to which he consented to findings that he was suspended by NASD for one month after he consented to findings that he engaged in private securities transactions, in violation of CFP Board’s Code of Ethics and Professional Responsibility, and that he failed to notify CFP Board of his professional suspension within ten calendar days as required. As part of the settlement, CFP Board issued Mr. Stearns a Letter of Admonition.

MICHIGAN

John R. Hantz (Southfield): In November 2006, CFP Board issued Mr. Hantz a Letter of Admonition after its investigation of an NASD inquiry. After a hearing, the Board of Professional Review (the Board) found that Mr. Hantz and his firm, of which he was President, CEO, Director and primary owner, entered into a Letter of Acceptance, Waiver and Consent (AWC) with NASD whereby they consented, without admitting or denying the allegations, to the entry of several findings, including the following: 1) Mr. Hantz’s firm encouraged its financial advisors to suggest to clients that both they and the firm were "independent," "not captive to one or a few product companies," and free to offer a number of different products, which was misleading; 2) his firm failed to inform its clients that it sold almost exclusively the products of certain preferred suppliers and that the firm selected those suppliers based in substantial part upon those firms’ willingness to pay significant marketing fees; 3) no system was in place to prevent the firm and its financial advisors from a) suggesting to investors that they and the firm were "independent;" b) failing to disclose that the firm sold almost exclusively the products of its preferred suppliers; and c) failing to disclose that the preferred suppliers were paying significant marketing fees to the firm that created a financial incentive to promote the products of preferred suppliers; 4) his firm received special cash compensation for NAV transfers of mutual funds from a particular mutual fund company even though those fees were not disclosed in the prospectuses or related documents as required; and 5) his firm failed to adequately disclose that its financial advisors received referral fees as compensation for recommending their clients to the affiliated mortgage subsidiary. As part of the AWC, Mr. Hantz was censured, fined $25,000 and suspended from acting in a supervisory capacity with any NASD member for 30 days. Pursuant to the AWC, his firm was censured, fined $675,000, and required to 1) place disclosures on its Web site regarding the preferred supplier relationships; 2) notify existing and new customers of the preferred supplier relationships; 3) implement procedures for training its financial advisors regarding disclosures of the financial incentives and independence; 4) arrange for an independent consultant to review the adequacy of its policies, procedures and disclosures and submit a report; and 5) adopt the independent consultant’s recommendations.

MISSOURI

Christopher J. Jacob (St. Louis): In November 2006, CFP Board issued Mr. Jacob a Letter of Admonition after its investigation of a state securities commission proceeding. After a hearing, the Board of Professional Review found that Mr. Jacob entered into a Consent Order wherein, without admitting or denying them, he consented to allegations that within a period of less than two full years, he switched a client from an existing long- term annuity to another long-term annuity that offered similar benefits but which restricted the client’s access to retirement assets, subjected the client to higher mortality fees, extended the number of years of withdrawal charges and generated additional commissions for him and his supervisor. As part of the Consent Order, Mr. Jacob also consented to findings that he engaged in dishonest or unethical practices in the securities business by failing to observe high standards of commercial honor and just and equitable principles of trade when he sold four long-term annuities to a client with very little investment experience, even though the purchase involved approximately 90% of the client’s net worth, restricted the client’s access to those assets and generated repeated commissions for himself. As part of the Consent Order, Mr. Jacob agreed to accept heightened supervision for a twelve-month period, to pay a $6,000 administrative fine, and to pay $150,000 in restitution to the client.

NEW JERSEY

Robert M. Ryerson (Freehold): In November 2006, CFP Board issued Mr. Ryerson a Letter of Admonition after its investigation of an NASD inquiry. After a hearing, the Board of Professional Review found that the National Adjudicatory Council of NASD made the following findings and sanctions: 1) Mr. Ryerson engaged in private securities transactions for compensation without providing written notice to and obtaining written approval from his employer, for which he was suspended for two years in all capacities, ordered to re-qualify in all capacities, and fined $230,000; 2) Mr. Ryerson shared commissions with a non-NASD member, for which he was suspended for 15 business days, to run concurrently with the previous suspension, and fined $5,000; and 3) Mr. Ryerson failed to provide fully and promptly on-the -record testimony to NASD, for which no additional sanctions were imposed.

TEXAS

Sidney J. Lorio (Bedford): In November 2006, CFP Board issued Mr. Lorio a Letter of Admonition after its investigation of an NASD arbitration generally alleging that Mr. Lorio breached his fiduciary duty to a client and recommended unsuitable investments. After a hearing, the Board of Professional Review found that a panel of NASD arbitrators determined that Mr. Lorio used improper hedging techniques, created excessive risk in the security selection process, and failed to actively monitor and correct the risk of his client’s portfolio.

Suspensions/Delay of Certification

CALIFORNIA

Garry A. Estrada (Murrieta): In November 2006, CFP Board suspended Mr. Estrada’s right to use the CFP® marks for one year and one day after its investigation of a state securities division proceeding. After a hearing, the Board of Professional Review (Board) found that Mr. Estrada entered into a Consent Agreement with his state’s securities division, pursuant to which he consented to findings that he recommended and sold his clients interests in private placements, even though those private placements were not registered for sale in the state, Mr. Estrada was not registered as a securities salesperson, and Mr. Estrada’s firm was not registered as a broker/dealer. The Board further found that as part of the Consent Agreement, Mr. Estrada consented to pay a $20,000 fine, to accept the revocation of his firm’s investment adviser registration, to accept the revocation of his investment adviser representative registration, and to accept further restrictions on his ability to re-apply for reinstatement of his registration. Finally, the Board found that Mr. Estrada failed to notify CFP Board of his professional revocation within ten calendar days as required.

Eric C. Howie (Santa Clara): In December 2006, Mr. Howie entered into a settlement agreement with CFP Board, pursuant to which he consented to findings that he violated CFP Board’s Code of Ethics and Professional Responsibility when he approached family and friends for financial help to investigate a possible new type of auto insurance without understanding how NASD interpreted their “private securities” rule or understanding that his actions could violate that rule, and as a result he entered into a settlement with NASD consenting to a 30-day suspension. As part of the settlement with CFP Board, Mr. Howie’s application to use the CFP® marks was delayed for 30 days.

NEW YORK

Frank P. Grasso (Sayville): In January 2007, Mr. Grasso 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 when, influenced by his firm’s policies and procedures, and at all times relevant acting upon the best interests of his clients, he caused applications to be processed with inaccurate address information to provide his clients with a favorable policy not officially provided by his firm. As part of the settlement with CFP Board, Mr. Grasso’s right to use the CFP® marks was suspended for nine months.

Kenneth L. Sojka (New Rochelle): In December 2006, Mr. Sojka entered into a settlement agreement with CFP Board, pursuant to which he consented to the following findings: 1) he failed to exercise prudent authority over employees who, on at least one occasion, appeared to have affixed his clients’ signatures to certain documents, which were omitted by the client; 2) he accepted full responsibility and was aware that his lack of adequate control over his employees amounted to a violation of CFP Board’s Code of Ethics and Professional Responsibility; 3) he accepted responsibility for not acting prudently related to an alleged unauthorized sale of stock in his client’s account and was fully aware that it was his responsibility to clear up any ambiguity regarding the transfer of assets with his clients; and 4) he acted imprudently with regard to the alleged “settling away” of a claim with his client because, although he believed that he had approval to issue the refund to his client directly, this belief should have been substantiated in writing. As part of the settlement with CFP Board, Mr. Sojka’s right to use the CFP® marks was suspended for one year and one day.

Revocations/Permanent Relinquishments

DELAWARE

William R. Barto (Hockessin): In November 2006, CFP Board permanently revoked Mr. Barto’s right to use the CFP® marks after he failed to respond to CFP Board’s August 2006 complaint investigating an inquiry initiated by his state’s insurance department. Because Mr. Barto failed to respond to CFP Board’s complaint, the allegations in the complaint were deemed admitted and an order of revocation was issued.

MICHIGAN

Carl P. Kellogg (Ada): In November 2006, Mr. Kellogg entered into a settlement agreement with CFP Board, pursuant to which he consented to a finding that he entered into a Letter of Acceptance, Waiver & Consent (AWC) with NASD pursuant to which he consented to a sixty-day suspension from association with any NASD member in any capacity and to pay a fine of $10,000. As part of the AWC, without admitting or denying the allegations, Mr. Kellogg consented to an entry of findings that he borrowed $140,000 from public customers in violation of his member firm’s written procedures that prohibited its registered representatives from borrowing money from customers unless the customers are the representative’s immediate family members and the representative obtains the firm’s prior written permission. The findings of the AWC further indicated that the customers from whom Mr. Kellogg borrowed the $140,000 were not his relatives and that he had not obtained written permission from his firm. Mr. Kellogg also consented to a finding that he failed to notify CFP Board of his professional suspension within ten calendar days as required. As part of the settlement with CFP Board, Mr. Kellogg agreed to permanently relinquish his right to use the CFP® marks.

TENNESSEE

Edward Alan Martin (Franklin): In November 2006, Mr. Martin entered into a settlement agreement with CFP Board, pursuant to which he consented to findings that he submitted an Offer of Settlement to NASD wherein, without admitting or denying the allegations, he consented to the entry of findings that he converted a public customer’s funds to his own use and benefit without the customer’s knowledge or consent. As part of the NASD settlement, Mr. Martin was barred from association with any NASD member in any capacity. Mr. Martin also consented to a finding that he failed to notify CFP Board of his professional bar within ten calendar days as required. As part of the settlement with CFP Board, Mr. Martin agreed to permanently relinquish his right to use the CFP® marks.

WISCONSIN

Thomas Van Tassel (Sparta): In December 2006, Mr. Van Tassel entered into a settlement agreement with CFP Board, pursuant to which he consented to a finding that, although his OSJ was aware of it, he violated the Code of Ethics and Professional Responsibility by not making sure that his broker/dealer was aware that he had affixed certain clients’ signatures to certain forms at their request. Mr. Van Tassel was previously suspended by NASD for 60 days for this conduct. As part of the settlement with CFP Board, Mr. Van Tassel agreed to permanently relinquish his right to use the CFP® marks.

The mission of Certified Financial Planner Board of Standards Inc. is to help people benefit from competent, professional and ethical financial planning. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. CFP Board currently authorizes more than 53,000 individuals to use these marks in the United States. 

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