A federal court handed the CFP Board a decisive and final win in its long-running fee only fight against two Florida planners Jeffrey and Kimberly Camarda. The court denied the Camardas' appeal of a judge's decision last year to throw out their case.
"This decision is a victory for [the] CFP Board’s disciplinary process [and] those who hold the CFP certification," Dan Drummond, the board's spokesman, said in a statement.
As predicted it might, the failure of the appeal brought an abrupt end to the 3-year-old conflict that may have produced the last lawsuit ever to be filed against the board regarding its controversial disciplinary process.
END TO SCRUTINY OF CFP BOARD DISCIPLINE?
In its decision this week, the U.S. Court of Appeals in Washington wrote that the husband-and-wife planners "argue that it was a breach of the implied covenant of good faith and fair dealing for the CFP Board to 'single out' the Camardas and not bring similar enforcement actions against other certificants who operated similarly."
However, a previous judge found that the fact that a the board may have treated some other parties “more leniently is no more a defense to a breach of contract than laxity in enforcing the speed limit is a defense to a speeding ticket," according to the court's decision.
While the board sought to sanction the Camardas and their independent practice for calling their practice fee only in 2012, it had been allowing hundreds of wirehouse advisers – many of whom are compelled by their firms to push high commission products on clients – to misrepresent themselves as fee only on the board's website. The board later acknowledged it had made a mistake in allowing them to do so and put a stop to the false advertising after an investigation by Financial Planning.
The federal judge who threw out the couple's case last year found there is no legal basis for courts to second guess the opinions of private organizations
The board successfully likened itself to a sorority in arguing its case.
RISKS TO 'CLUB' MEMBERSHIP
"CFPs should be afraid of unchecked disciplinary actions that could be taken against them, or unchecked policies and procedures that they didn't sign up for," Sharron Ash, chief litigation officer at the Hamburger Law Firm in Englewood, New Jersey, said last month in discussing the prospect that the appeal would fail.
"Advisers typically don't have any idea what it means to be a member of this club," she added.
Nonprofit experts have said the court's decision last year is evidence of a problem with systemic unchecked power in all nonprofit organizations, which can operate largely without intervention by courts.
The board's new mandatory arbitration rules ensure that all of its future clashes with its CFPs will take place behind closed doors, without the public scrutiny afforded by a lawsuit.
Nonetheless, Drummond added in his statement: "The court’s decision vindicates [the] CFP Board’s ability to enforce its standards through a fair, transparent, peer-review process, ensuring benefits and protections for the public and CFP professionals, now and for years to come."
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access