SEC Staff to CFP Board: Brokers and Advisers Can Share Information
"No Action" letter from SEC staff permits firms to provide CFP Board with information relating to customer complaints without violating customer privacy provisions of Regulation S-P
Washington, DC, April 19, 2011 – The Securities and Exchange Commission staff has provided Certified Financial Planner Board of Standards, Inc. with a ”No Action” letter stating that Registered Investment Advisers (RIAs), broker-dealers and their representatives would not be in violation of Regulation S-P and therefore, would not face SEC enforcement action, for sharing information with CFP Board relating to customer complaints.
"We appreciate the SEC staff's consideration of our policies and procedures with regard to conducting background checks of candidates for CFP® certification and investigating allegations of misconduct by CFP® professionals," said Chief Executive Officer Kevin R. Keller, CAE. "We believe this guidance from SEC staff will help candidates become certified more quickly while also resulting in stronger enforcement actions as now there is no longer a reason for firms to object to sharing customer complaint information with CFP Board."
As part of the certification process, CFP Board conducts a background check on all candidates for CFP® certification. If CFP Board becomes aware of a customer complaint filed against a candidate, we seek information relating to the nature of the complaint, the outcome of the firm's investigation of the complaint and the outcome of any arbitration proceeding. Similarly, when CFP Board investigates an allegation of misconduct by a CFP® professional, we request this same information.
In the past, broker-dealers and RIAs have frequently cited Regulation S-P as preventing them from sharing such information with CFP Board. This has caused delays in CFP Board's ability to process applications for certification, as well as delays in the 501(c)(3) non-profit organization's ability to investigate and possibly bring disciplinary actions against CFP® professionals.
The No Action letter clearly indicates that SEC staff will not bring an enforcement action against a broker-dealer or RIA that shares non-public personal customer information with CFP Board. While Regulation S-P is intended to protect the privacy rights of customers, the No Action letter acknowledges that protecting the public from criminal and improper conduct is paramount to ensuring investor confidence.
"We are often stymied in our investigations by firms citing Regulation S-P as the reason they cannot release relevant and pertinent information to us," said Michael P. Shaw, Managing Director for Professional Standards and Legal. "That will no longer be the case as broker-dealers and registered investment advisers are now in a position where they can assist CFP Board with our investigations. The end result will be investigations that take less time to complete and I expect to see a significant reduction in the number of cases that we dismiss for lack of sufficient evidence."
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