CFP Board Censures Advisors for Run-Ins with FINRA
The CFP Board's latest round of sanctions names almost a dozen advisors, including several planners who had run-ins with FINRA that got them barred from the industry.
One advisor was alleged to have employed "deceptive, fraudulent and manipulative devices and schemes," involving stock purchases and sales. Another was alleged to have converted, or taken, funds from a client's estate and trust.
The board, which released details of the censures this week, said its decisions were final. Here is a synopsis of 11 advisors who were censured by the board in recent months.
David Gabai, West Hills, Calif.: The CFP Board's Disciplinary and Ethics Commission issued an order in July suspending Gabai’s right to use the CFP certification marks for five years after finding out that that FINRA barred him for using and employing "deceptive, fraudulent and manipulative devices and schemes involving the purchase and sale of a stock." The commission said this constituted a willful violation of SEC and FINRA rules. Gabai, who also had failed to disclose the FINRA suspension to the CFP Board in writing within 30 days, was issued a suspension effective from August 30, 2015, until August 30, 2020. Gabai is no longer a registered broker, according to FINRA. He could not be reached for comment.
David Hitchcock, Spring Lake Park, Minn: The CFP Board reached a settlement with Hitchcock in October for a one-year suspension after he consented to several of the board’s findings relating to alternative investment products. Among the findings, the board claimed that he misrepresented an alternative investment as a low-risk investment to two clients. The board does not indicate where Hitchcock was working during his alleged misrepresentations. Hitchcock, who is current working at an RIA for Northtown Capital Strategies, declined to comment.
Doyle Brown, Reno, Nev.: The CFP Board issued an order in July suspending Brown's right to use the CFP certification marks for one year. The commission found that Brown "engaged in conduct that reflected adversely on his integrity," as well as the CFP profession by failing to file taxes for a number of years and having an outstanding amount owed to the IRS in excess of $136,000. Brown, currently with SagePoint Financial, said he had forgotten to tell the board about a tax lien he plans to pay, and made "tactical mistake" of not attending a hearing to explain himself.
Richard Blair, Bee Cave, Texas: In July, the CFP Board suspended Blair’s right to use the CFP certification for four years after learning he had been sanctioned by the Texas State Securities Board relating to the sale of shares of a REIT that included a commission payment. The TSSB found that he could have sold lower priced shares for the same REIT and forgone the financial incentive, the board said. Moreover, Blair allegedly charged some of his clients a management fee in addition to a commission he received from the sale. The board pulled Blair's certification after it alleged he failed to meet a TSSB order to make timely payments reimbursing his clients for the commission and fee. The board also found that he failed to report in a timely manner to FINRA about a securities-related civil litigation that was settled and multiple customer complaints. The board does not indicate where Blair was working when he was alleged to have overcharged his clients. He is currently with RIA Wealth Solutions. Blair did not return a call seeking comment.
Michael John Smeriglio III, Greenwich, Conn: In May, the CFP Board issued an automatic interim suspension of Smeriglio's CFP certification after discovering that he was barred from the industry by FINRA. The board found that Smeriglio had entered into a letter of acceptance, waiver and consent with FINRA that accused him of converting, or removing, funds from a client's estate and trust. He entered into the agreement without admitting or denying the allegations of a FINRA investigation. The industry regulatory organization permanently barred him from associating with any FINRA member in any capacity, according to the board. Smeriglio, who runs an accounting firm under his own name, did not return a call seeking comment.
Marc H. Baldinger of Stuart, Fla.: In May, the CFP Board issued an order permanently revoking Baldinger’s right to use the CFP certification marks after learning he had entered into a letter of acceptance with FINRA regarding private securities transactions he allegedly made without the prior approval of a broker-dealer he was affiliated with, LPL Financial. He consented to the findings, without admitting or denying the allegations. The FINRA findings also accused him of failing to disclose to LPL his position as managing partner of two limited liability companies, and opening an account with an outside broker-dealer without notifying his employer or the broker-dealer, in violation of National Association of Broker-Dealers and FINRA rules. The CFP Board issued an Administrative Order of Revocation effective June 18. Baldinger, who currently runs a practice under his own name, did not return a call seeking comment.
Ronald W. Vaught of Melbourne, Fla.: In June 2015, the CFP Board issued an order permanently revoking Mr. Vaught’s right to use the CFP certification marks after learning he was barred from the industry by FINRA. Vaught entered into a letter of acceptance with FINRA after it alleged he failed to notify his employer that he was named as a successor trustee and beneficiary of a client’s trust. He also was accused of falsifying a business document and improperly used a client’s funds. He consented to the findings, without admitting or denying them. The board does not indicate where Vaught was working when he was barred from the industry. He could not be reached for comment.
Marcus C. Rodriguez of Houston: In June 2015, CFP Board issued an order permanently revoking Rodriguez’s right to use the CFP certification marks after he failed to answer allegations that he violated the board's rules of conduct. The board said Rodriguez was the subject of a default decision from FINRA which resulted in a two-year suspension and a $50,000 fine. An Administrative Order of Revocation was issued effective as of July 2 by the board, which does not indicate where Rodriguez was working as an advisor when he violated the conduct rules. He could not be reached for comment.
Thomas W. Markowsky of Orlando, Fla.: In June 2015, CFP Board’s Disciplinary and Ethics Commission ordered a public letter of admonition be issued to Markowsky relating to two bankruptcy filings. Markowsky filed Chapter 7 bankruptcies in 1997 and again in 2014, "which reflected adversely on his integrity and fitness as a CFP professional, upon the CFP marks and upon the profession," the commission said. The board explained that while there were mitigating factors behind both filings, "the 2014 bankruptcy was due in part to unwise financial planning decisions with respect to Mr. Markowsky’s personal affairs." The board does not indicate where Markowsky was working when he experienced his financial troubles. He could not be reached for comment.
J. Michael Vaughn of Lahaina, Hawaii: In June 2015, CFP Board’s Disciplinary and Ethics Commission issued a public letter of admonition after Vaughn consented to board findings that he made 20 discretionary transactions in three different customer accounts without obtaining prior written authorization. He also did not have the accounts accepted as discretionary accounts by his firm. "Vaughn admitted he executed transactions without obtaining prior written authorization, but stated that he had received verbal authorization and was acting in the best interest of his client," the board said. Vaughn’s firm terminated him for cause based on his conduct, according to the board, which does not indicate where he was working as an advisor when he allegedly made the discretionary transactions. He could not be reached for comment.
Richard A. Connell, CFPof Hingham, Mass.: In June 2015, CFP Board’s Disciplinary and Ethics Commission issued a public letter of admonition to Connell after learning he failed to amend his Form U4 with FINRA in a timely manner to disclose a 2009 Chapter 7 bankruptcy filing. Connell agreed to a one-month suspension from association with any FINRA member in any capacity and $5,000 fine. "I received bad advice and untimely reporting of this issue caused this situation that the board had to discipline," Connell said. Connell is currently with 1st Global.
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