Two planners who sued the CFP Board over a fee-only dispute are asking the court to unseal many of the documents, citing public interest in making them available for review.

Many of the records related to the landmark case have been submitted to the court confidentially. No matter the outcome of the case, which is on appeal after a judge threw it out last year, unsealing the documents would allow members of the public to better evaluate claims made by both sides.

Read more: Lawsuit by planners could be last CFP Board faces

The issue is of particular importance given that the board unilaterally imposed mandatory arbitration on all its 75,000 CFPs this summer. The stipulation made it unlikely that any court will be able to scrutinize the way it investigates and punishes its planners.

The only such case to offer a window into the board's disciplinary process is the one filed by husband-and-wife advisers Jeffrey and Kimberly Camarda from Florida in 2013.

While the board has agreed to unseal a substantial number of documents in the Camardas’ case, it opposes the release of documents related to other disciplinary cases not involving the Camardas.


"It has always been [the] CFP Board’s position that these documents are irrelevant to the Camardas’ claims," the board's spokesman Dan Drummond wrote in an email.

Three years ago, the Camardas filed suit to stop the CFP Board from publicly sanctioning them for calling their practice fee-only when the couple also ran a small insurance agency. Among many clients and prospects, fee-only is seen as an advantageous term since it supposedly excludes advisers who earn commissions from putting clients into particular investments.

While the board targeted the Camardas it was allowing more than 400 CFPs at wirehouses and other firms to call themselves fee-only in their profiles on the board's website, in violation of its rules. The Camardas said they transacted a trivial amount of business through their insurance agency, yet wirehouses often push their planners to generate as much commission revenue as they can.

A federal judge in Washington threw out their case last summer on the grounds that courts do not generally insert themselves into the affairs of private organizations like the CFP Board, which is a 501(c)3 nonprofit.


The board is fighting the Camardas' request to unseal documents.

[Image: Getty]
[Image: Getty]

The "CFP Board, like other litigants, has a right to the confidentiality of documents that are produced in litigation but do not play a part in the court’s evaluation of the merits of the parties’ claims," Drummond wrote.

The board says that "the court’s decision vindicates CFP Board’s ability to enforce its standards through a fair, transparent, peer-review process," according to Drummond.

But the Camardas note in their court filing that the judge did not evaluate all of the evidence regarding the heart of their claim. Had he done so, they believe the court might have found in their favor, which is the motivation behind their appeal. In their newest motion, they agree to redact information that would identify other CFPs.

Ron Rhoades, a longtime critic of the board and head of the financial planning department of Western Kentucky University, says he thinks unsealing the documents would be a good thing.

"I'm generally in favor of transparency," he said.

Rhoades praised the board for taking a leadership role with government regulators, including the SEC and the Department of Labor, on the subject of fiduciary client care.

If unsealing the documents were to produce negative revelations about the board "we would need to put it in context of all the good they have done," Rhoades says.

Michael Kitces, a well-known planner and Financial Planning contributing writer who has pressured the board to make its new mandatory arbitration clause more transparent, thinks the board should allow the release of the documents.

"Why so much secrecy if there's nothing to hide?" he asks.

Ann Marsh

Ann Marsh

Ann Marsh is Senior Editor and West Coast Bureau Chief of Financial Planning.