For CFP® Professionals

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Bankruptcy Disclosure Procedures

The Board of Directors of Certified Financial Planner Board of Standards, Inc. (CFP
Board) recently approved the following changes to the way CFP Board addresses cases
involving a CFP® professional who has filed bankruptcy within the previous five years,
and who is not under investigation by CFP Board for any other conduct (“bankruptcy-only
cases”).

These procedures apply only to CFP® professionals who have filed bankruptcy one time.  In cases where a CFP® professional has filed bankruptcy more than one time, regardless of the dates of the filings, CFP Board will investigate the filings under the normal disciplinary procedures outlined in the Standards of Professional Conduct.

Background

The Board of Director’s decision follows a 30-day comment period held from January 18,
2012 through February 17, 2012, during which CFP Board received a total of 316
comments. Of these, 48% were in favor of the proposed bankruptcy disclosure
procedure, 42% were in favor of CFP Board maintaining its investigative and disciplinary
approach to CFP® professionals who filed bankruptcy, and 10% were either neutral or
believed that CFP Board should neither disclose nor investigate a bankruptcy filing.

After reviewing the comments, it became clear that many of those commenting were
opposed to the disclosure procedure believed the disclosure was not sufficient in that
only those consumers who choose to utilize one of CFP Board’s search functions would
become aware of a CFP® professional who has filed bankruptcy. CFP Board considered
these comments and modified its initial proposal to include the issuance of a news
release no less frequently than four times each year to identify CFP® professionals who
have filed bankruptcy within the previous five years.

CFP Board believes that the bankruptcy disclosure procedure furthers CFP Board’s
mission of benefiting the public by making consumers aware of any CFP® professional
who has filed a bankruptcy within the previous five years. The new procedure is also
consistent with a CFP® professional’s obligation under the Rules of Conduct to disclose
a bankruptcy filing to a client or prospective client. Rule 2.2(c) of the Rules of Conduct
provides that a CFP® professional must disclose to a client or prospective client any
information about the CFP® professional that could reasonably be expected to materially
affect the client or prospective client’s decision to engage the CFP® professional.

Bankruptcy Disclosure Procedure

CFP Board will no longer investigate, and the Disciplinary and Ethics Commission will no
longer adjudicate, bankruptcy-only cases. Rather, CFP Board will verify the bankruptcy
filing by checking publicly available court records, then note the bankruptcy filing on the
CFP® professional’s public profile, which is available through the search functions on
CFP Board’s websites, including the “Find a CFP® Professional” and “Verify
an Individual’s CFP® Certification” search functions. CFP Board will also share with
consumers and other stakeholders who contact CFP Board regarding a CFP®
professional’s certification status the information in the CFP® professional’s public profile,
including identifying whether the CFP® professional has filed bankruptcy. The disclosure
of the bankruptcy in a CFP® professional’s public profile will continue for 10 years from
the date CFP Board is notified of the bankruptcy, whether resulting from disclosure by
the CFP® professional or discovery by CFP Board.

Additionally, CFP Board will issue a news release no less frequently than four times
each year to identify CFP® professionals who have filed bankruptcy within the previous
five years. A CFP® professional’s name will appear only one time on a news release.
As a result of issuing the news release, the public will be able to access the information
contained in the news release through commonly used internet search tools.

Retroactivity

The bankruptcy disclosure procedure will be applied retroactively to any CFP®
professional who, as a result of having a bankruptcy-only case, received a public
discipline from CFP Board. Public discipline includes revocation, suspension and public
letter of admonition. These individuals will have the option of retaining their public
discipline and the press release associated with that discipline or having the public
discipline rescinded and previous press release removed from CFP Board’s website and
replaced with the new bankruptcy procedure. Any CFP® professional who previously
received a private censure for having a bankruptcy-only case or whose bankruptcy-only
case was dismissed by CFP Board will not be affected by the new procedure.

The bankruptcy disclosure procedure will also be applied retroactively to any candidate
for CFP® certification who, as a result of having a bankruptcy-only case, was denied
certification and offered the opportunity to re-apply on a date specified by the
Disciplinary and Ethics Commission. These individuals will have the option of waiting to
re-apply no sooner than the date specified by the Commission, or have their order of
denial rescinded and be granted CFP® certification on the condition that their bankruptcy
filing will be made public via the search function on CFP Board’s website and in a news
release. Any individuals who had a bankruptcy-only case and were granted CFP®
certification will not be affected by the new procedure.

Recorded Webinar: How Is CFP Board Protecting the CFP® Marks?

On May 2, 2012, CFP Board held a webinar outlining recent updates to CFP Board's enforcement procedures, including new procedures addressing bankruptcy filings and amendments to CFP Board's Disciplinary Rules and Procedures. During this webinar, Chris Beard, CFP®, 2012 Chair of CFP Board's Disciplinary and Ethics Commission, and Michael P. Shaw, Esq., CFP Board's Managing Director of Professional Standards and Legal, shared details about how each of these changes affect CFP® professionals and answered questions from the live audience.



View the recorded webinar on CFP Board’s YouTube Channel

 

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