How The CFP® Board Enforces Its Disciplinary Process

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This past January, the CFP® Board hired Thomas Sporkin as its new head of enforcement, allowing the organization to split its enforcement section into two separate functions. For the first time since his appointment, Sporkin outlined the new enforcement system, which he believes will increase public trust that disciplinary infractions by CFP® practitioners will be identified.

As the CFP® Board continues to crack down on its professionals, it’s important for financial planners to understand what constitutes misconduct. 

CFP Board of Standard’s Code and Standards of Conduct

Misconduct on the part of a Certified Financial Planner™ (CFP®) professional, in violation of the CFP® Board of Standard’s Code and Standards of Conduct, is grounds for sanction. Sanction categories include private or public censure, as well as either temporary or permanent suspension of the right to use CFP® marks.

In many cases, public fines are the result of the board’s “historical investigations,” which were launched after the CFP® Board began subjecting all professionals to background checks. These checks are intended to catch any potential misbehavior that hasn’t been reported to the CFP® Board.

Regulatory actions, business terminations, consumer complaints, arbitrations, and civil court litigation involving professional conduct, criminal cases, bankruptcies, civil judgments, and tax liens are all examples of relevant wrongdoing.

If you are under CFP investigation or need assistance removing defamatory or meritless disclosures from your record, give us a call at (303) 952-4025. Or contact us for a complimentary consultation!

CFP Board Enforcement

By way of background, CFP® professionals pledge to follow the CFP® Board’s Code of Ethics and Standards of Conduct as part of their certification. In turn, the CFP® Board enforces its ethical standards by investigating reported infractions. If there is probable cause to believe there are grounds for discipline, it forwards a complaint describing any claimed violations to the CFP® Board’s Disciplinary and Ethics Commission. The commission examines every case on its own merits, taking into account the specifics of each case, and if it deems that there are grounds for action, it may issue a sanction.

The Board enforces its Code and Standards through a peer-review process that typically includes some or all of the following steps:

  1. Investigation Commencement: The CFP® Board will commence an investigation with its authority to investigate a CFP® professional.
  2. Investigation: If the Board decides to proceed, the CFP® professional may receive a Notice of Investigation (NOI), which indicates the nature of the allegations against them and provides relevant information. The CFP® professional then has 30 days to acknowledge receipt of the NOI. Failure to respond puts the CFP® professional in default and is subject to disciplinary action from the Board. 
  3. Document, Information, and Admission Requests: The CFP® professional may then be asked to admit or deny the alleged conduct and provide documentation and answer questions pertaining to the allegations. Again, the CFP® professional has 30 days to do so upon receiving a request from the Board.
  4. Determination of Probable Cause: The Board reviews the materials pertaining to the allegations and determines whether there is probable cause to impose sanctions. It will then either dismiss the allegations and indicate whether further investigation may or may not be warranted, or it will initiate a complaint against the CFP® professional. When a dismissal occurs, a Letter of Dismissal is issued by the Board, yet the possibility of the Board reopening the investigation in the future remains. The CFP® professional is entitled to respond to a Letter of Dismissal.
  5. Complaint Issuance: When a Complaint is issued, the CFP® professional has 30 days to respond to the specific allegations, detailed description, and potential Code and Standards violations alleged therein. Should the CFP® professional default and not meet the 30-day deadline, the Board revokes the CFP® professional’s certification and license, either temporarily or permanently, depending upon the severity of the alleged misconduct.
  6. Hearing Panel: A panel of at least three people, including at least two CFP® professionals and at least two members of the Disciplinary and Ethics Commission (DEC), conducts a hearing chaired by a DEC member.
  7. Disciplinary and Ethics Commission: The hearing panel recommends to the DEC whether grounds for sanction have been warranted and if so, which sanctions may be appropriate. The DEC reviews the recommendations and either accepts, rejects, or modifies them, and it issues a final order which includes any sanction to be imposed. The DEC’s decision in an issued order is final.
  8. Appeals: When a CFP® professional disagrees with the DEC’s order, the individual may petition the Code and Standards Enforcement Committee, which may refer an appeal to the Appeal Panel. The Appeal Panel then reviews the case and presents its findings to the Committee. The Committee will issue a final order, conduct further proceedings, or resubmit the matter to the Appeal Panel. The Committee’s decision is the Board’s final decision.

If you are under CFP investigation or need assistance removing defamatory or meritless disclosures from your record, give us a call at (303) 952-4025. Or contact us for a complimentary consultation!

CFP Board Gets Tough

In November of 2021, the CFP® Board announced that professionals who failed to report “certain categories of information” within 30 days would receive a public censure. The full list of categories can be found in the Board’s revised sanction guidelines. 

While some are eager for the new changes to take place, many are worried that the increased enforcement is dissuading advisors from pursuing a CFP® designation altogether. And the Board doesn’t seem to be slowing down. 

As the rules and regulations governing CFP® professionals continue to evolve and change, advisors must stay vigilant. If you ever find yourself under CFP® investigation, the first step is to arm yourself with effective and knowledgeable counsel. AdvisorLaw’s team of attorneys can help you build your strongest defense while ensuring that you are in compliance with FINRA’s rules and procedures. 

If you’re interested in learning more about our services, please fill out the form below for a complimentary consultation:

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