Bankruptcy Disclosure Procedures
Read CFP Board's Notice Regarding Bankruptcy Standard and Procedures
In April 2012, the Board of Directors of CFP Board 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 Disciplinary Rules and Procedures.
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.
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.