CFP Board Censures Improper CFP® Certificant Conduct
|Arizona||Randy J. Tudor||Phoenix||Revocation|
|California||Carl A. Engele||Bakersfield||Suspension|
|Stephen J. Kasa||San Ramon||Letter of Admonition|
|Colorado||Chad A. Carpenter||Denver||Revocation|
|Georgia||Charles B. Davis Jr.||Snellville||Revocation|
|Massachusetts||Gerald R. Stonehouse||Norwell/Hingham||Suspension|
|Ohio||Sandra K. Haines||Lewis Center||Revocation|
|Texas||Douglas Wayne Blankenship||Addison||Letter of Admonition|
"We don't just set professional standards for competency and ethics in financial planning," said Gary Diffendaffer, CFP®, executive vice president of CFP Board. "We also hold CFP® certificants accountable to those standards through a strict Professional Review and disciplinary process. Consumers should demand that kind of accountability from any organization that administers 'initials' after a financial planner's name."
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, Chad A. Carpenter, Charles B. Davis Jr., Sandra K. Haines and Randy J. Tudor no longer have the right to use the CFP marks. Carl A. Engele's right to use the CFP® marks was suspended for one year, and Gerald R. Stonehouse's right to use the CFP® marks was suspended for one year and one day. CFP Board issued Douglas Wayne Blankenship and Stephen J. Kasa letters of admonition. Blankenship and Kasa retain the right to use the CFP® marks.
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 of the Code of Ethics or Practice Standards by CFP® certificants. The basis for each decision can be found in the attached report. Consumers can check on a planner's disciplinary history and certification status with CFP Board at www.CFP.net.
CFP Board can temporarily suspend an individual's right to use the CFP® marks when it appears that the individual has 1) been convicted of a serious crime, 2) been the subject of a suspension by any governmental or industry self-regulatory authority, 3) taken property or funds not his or her own for personal use, or 4) engaged in conduct that poses an immediate threat to the public, pending the resolution of the underlying disciplinary case. Before an interim suspension is issued, the individual has the opportunity to show by a preponderance of evidence that he or she does not pose an immediate threat to the public and that the gravity of the nature of his or her conduct does not impinge on the stature and reputation of the CFP® marks.
CFP Board, a nonprofit regulatory organization, fosters professional standards in personal financial planning so that the public values, has access to and benefits from competent and ethical financial planning. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and , which it awards to individuals who successfully complete initial and ongoing certification requirements. CFP Board currently authorizes more than 44,000 individuals to use these marks in the United States.
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DISCIPLINARY ACTION REPORT
Randy J. Tudor (Phoenix): CFP Board permanently revoked Mr. Tudor's right to use the CFP marks after he failed to file an answer to CFP Board's complaint investigating a pending Arizona Board of Accountancy proceeding that Mr. Tudor disclosed to CFP Board on his certification renewal form. Because Mr. Tudor failed to file an answer to CFP Board's complaint, the allegations in CFP Board's complaint were deemed admitted and an order of revocation was issued.
Chad A. Carpenter (Denver): In August 2004, CFP Board permanently revoked Mr. Carpenter's right to use the CFP marks after he failed to respond to its complaint investigating his guilty plea to criminal felony charges of unauthorized use of a financial transaction device (credit card fraud), for which he received a one-year deferred sentence and was ordered to pay restitution, and a 1998 domestic violence city ordinance violation to which he pleaded guilty. Due to the seriousness of the criminal matter and the related media publicity, in June 2004, CFP Board suspended Mr. Carpenter's right to use the CFP marks on an interim basis while CFP Board conducted its investigation, which culminated in the complaint. Pursuant to the Disciplinary Rules and Procedures, because the respondent failed to respond to the complaint, the allegations in it were deemed admitted and an order of revocation was issued, permanently revoking his right to use the CFP marks.
Charles B. Davis Jr. (Snellville): In June 2004, CFP Board permanently revoked Mr. Davis' right to use the CFP marks following its investigation of an NASD arbitration he disclosed in conjunction with his request to reinstate his certification, and its discovery of his use of the CFP marks for a period of approximately eight years, during which time he was uncertified and unauthorized to do so. Mr. Davis' broker/dealer subsequently paid the client $77,000 in settlement of the arbitration claim. After a hearing was conducted, CFP Board found that 1) Mr. Davis invested the client's money in aggressive stock mutual funds inconsistent with the client's investment goals; 2) he mislead the client by providing illustrations that did not apply to funds actually purchased; 3) he failed to disclose to the client the substantial withdrawal fee associated with withdrawing from the investment sooner than seven years; 4) he misrepresented the amount the client could withdraw from the client's portfolio and still maintain principal; 5) he failed to make a breakpoint disclosure to the client and did not hit breakpoints, even though he could have; 6) he filled out the client's new account form and erroneously listed the client as married; 7) he failed to disclose the NASD arbitration on his August 2002 certification renewal form, as required; 8) he became uncertified for failure to renew his certification, pay the related fees and submit the required continuing education as agreed; and 9) he used the CFP marks in a variety of documents while uncertified and unauthorized to do so.
Sandra K. Haines (Lewis Center): In May 2004, CFP Board permanently revoked Ms. Haines' right to use the CFP marks after Ms. Haines failed to respond to CFP Board's complaint investigating two 1998 civil lawsuits filed against her that she failed to disclose as required on the appropriate certification renewal forms, as well as a 1999 customer complaint, all related to insurance products that Ms. Haines allegedly misrepresented to clients. CFP Board's investigation also included Ms. Haines' repeated failure to respond to CFP Board's requests in a timely manner. Because Ms. Haines failed to respond to CFP Board's complaint, the allegations in the complaint were deemed admitted and an order of revocation was issued.
Carl A. Engele (Bakersfield): In March 2004, CFP Board suspended Mr. Engele's right to use the CFP marks for a period of one year after its investigation of four customer complaints regarding unregistered securities and/or promissory notes from a particular company that were sold by Mr. Engele's wife, to whom Ms. Engele referred clients. After a hearing was conducted, CFP Board found that Mr. Engele's actions constituted a conflict of interest and that he failed to disclose this conflict of interest to his clients, as required. CFP Board also found that, as a result of his involvement with the particular investment products, Mr. Engele was terminated by his prior employer after its investigations revealed that he sold unregistered securities and failed to notify the employer of his outside business activities in a timely manner. In mitigation, CFP Board considered that Mr. Engele appeared to be remorseful and committed to using only products approved by his broker/dealer. In aggravation, CFP Board considered that three complaints regarding the investment products at issue were settled by Mr. Engele's employer for a large sum and that he used his family association to circumvent applicable rules and regulations.
Gerald R. Stonehouse (Norwell/Hingham): In July 2004, CFP Board suspended Mr. Stonehouse's right to use the CFP marks for one year and one day after its investigation of an NASD letter of acceptance, waiver and consent (AWC) related to selling away and an offer of settlement with the Massachusetts Securities Division (MSD) for selling away, unsuitable investment strategy and violation of state laws. Mr. Stonehouse failed to notify CFP Board of his professional suspensions within 10 days as required. CFP Board also discovered that Mr. Stonehouse was the subject of three customer complaints relating to the investment at issue in the NASD AWC and MSD offer of settlement. After a hearing was conducted, CFP Board found that 1) Mr. Stonehouse entered into an AWC with the NASD, pursuant to which, without admitting or denying liability, he consented to findings that he participated in private securities transactions without prior written notice to or approval from his member firm, and to the imposition of a 30-day suspension from association with any NASD member and a $5,000 fine; 2) the MSD suspended Mr. Stonehouse's broker/dealer agent and investment adviser representative licenses for one year in connection with his selling unregistered securities, failure to receive approval to conduct outside business activities and for violating state and federal securities laws; 3) Mr. Stonehouse failed to notify CFP Board of his professional suspensions within 10 calendar days as required; 4) Mr. Stonehouse referred clients to an individual for an investment despite his broker/dealer's determination that the investment strategy was unsuitable; 5) he sold interests in a hedge fund after his broker/dealer disapproved the sale; 6) he sold investments to clients that were not approved by his broker/dealer; and 7) he was terminated for cause by his broker/dealer. In mitigation, CFP Board considered that Mr. Stonehouse believed he was acting in his clients' best interests. In aggravation, CFP Board considered that this was the second time Mr. Stonehouse came before the Board of Professional Review, and that he was informed by his broker/dealer not to implement the strategy at issue, but elected to do so anyway.
Public Letters of Admonition
Stephen J. Kasa (San Ramon):In June 2004, CFP Board issued Mr. Kasa a public letter of admonition after its investigation of four NASD arbitration proceedings, one civil lawsuit and an NASD letter of caution he received and his false attestations on applicable renewal forms with respect to some of those matters. The claimants and the NASD all alleged unsuitability with respect to limited partnership investments he recommended and sold them, among other claims. Three of the NASD arbitrations and the civil lawsuit settled and in the fourth NASD arbitration the arbitrators found Mr. Kasa and his broker/dealer liable and issued an award to the claimant. Mr. Kasa did not contribute to any of the settlements. After a hearing was conducted, CFP Board found that 1) Mr. Kasa's investment recommendations in all but one of the matters resulted in the over-concentration of assets in limited partnerships; 2) he falsely attested about some of the matters on applicable renewal forms; and 3) he received a letter of caution from the NASD with respect to the suitability of his recommendations to four claimants. In mitigation, CFP Board considered that Mr. Kasa appeared sincere, took the proceedings seriously and had no other complaints against him. In aggravation, the Board considered the ages of the clients involved. Mr. Kasa retains the right to use the CFP marks.
Douglas Wayne Blankenship (Addison): In June 2004, CFP Board issued Mr. Blankenship a public letter of admonition after its investigation of 1) a customer complaint for which the customer was awarded damages; 2) a cautionary letter he received from the NASD with respect to a customer complaint alleging that he changed the investment allocation in a variable life insurance policy with only the clients' verbal, not written, consent and with respect to the fact that he signed numerous other customers' names to mutual fund reallocation forms with only verbal, not written, consent; 3) his subsequent termination; and 4) a related disciplinary order reprimanding an agent issued by his state's securities division finding that he had engaged in fraudulent business practices when he failed to properly maintain the agreed-upon diversification in the clients' portfolio, despite his assurances that he would do so. In mitigation, CFP Board considered that Mr. Blankenship appears to have changed his business practices regarding documentation of verbal communications with clients. In aggravation, CFP Board considered that Mr. Blankenship appeared not to understand the seriousness of the regulatory actions taken against him. Mr. Blankenship retains the right to use the CFP marks.