Seeking to avoid the "embarrassment," "annoyance" and "expense" of a lawsuit, the CFP Board is asking a federal judge to quash most requests for documents and depositions from two planners who are suing the organization.
In trying to rein in the scope of a possible trial, the board also contends that its treatment of other advisors - including those it allowed to misrepresent themselves on its website as receiving fee-only compensation - is irrelevant to a suit filed in June in Washington by Jeffrey and Kimberly Camarda of Fleming Island, Fla.
At issue is whether the CFP Board ultimately will publicly sanction the Camardas for advertising their practice, Camarda Wealth Advisory Group, as fee-only. The board contends the Camardas violated its rules for use of the term - a claim the couple denies.
The board's investigation of the Camardas last year prompted a flurry of similar, follow-on investigations of sitting board officials. One resulted in the forced resignation of former CFP Board Chairman Alan Goldfarb. At the same time the board was investigating the Camardas, Goldfarb and others, it had been allowing hundreds of advisors at wirehouses, banks, independent broker-dealers and insurance companies to call themselves fee-only against its rules on the board's website, a popular search tool for consumers to find an advisor and sort them by compensation model.
This prompted claims of favoritism and a selective disciplinary process by the CFP Board, whose membership has surged largely by adding CFPs from the wirehouses, banks, independent broker-dealers and insurance companies.
In September, the board put a stop to the rule-breaking on its site and issued an amnesty to hundreds of advisors who had been misrepresenting themselves as fee-only. Yet no such amnesty was offered to the Camardas, Goldfarb or other former officials before they were sanctioned.
How the board treated other planners should "not be considered by the court because it exceeds the proper scope of judicial review," the board argues in its motion, filed Friday.
That doesn't make much sense to Tina Florence, a former member of the board's disciplinary and ethics commission.
"Any time a CFP is involved in [a] hearing process, it is clearly relevant to other CFPs," Florence says. The decision reached after a hearing is "recorded as anonymous case histories" on the board's website, she says, and are "cited in subsequent discipline matters." Florence was one of the former board officials sanctioned privatelyfor an alleged compensation disclosure violation in the wake of the Camardas' case.
In its filing, the board cites multiple previous cases in which Washington courts have declined to review disciplinary or other decisions of private organizations with voluntary membership. "Courts ordinarily will not interfere with the ... internal affairs of a voluntary organization," the board writes, citing a 2000 case. Citing another case, it argues that the court must defer to a private organization's interpretation of its own rules unless "plainly erroneous." And it quotes a court ruling from an unrelated earlier case: "We are not free to conduct a de novo review or substitute our judgment for that of the [accrediting organization]."
Through its spokesman, Dan Drummond, the board declined to elaborate on its filing.
In the coming weeks, depositions are scheduled for CFP Board CEO Kevin Keller; Michael Shaw, its head of disciplinary and legal affairs; Adam Zajac, counsel to the board; and Drummond; as well as several former disciplinary panel members including Bill Hayes, Allen Genaldi, Martin Siesta and V. Raymond Ferrara, who is also the board's 2014 chairman.
Earlier this month, the Camardas' discovery requests included the board's records of all previous cases the board's disciplinary commission had heard regarding compensation, among other items.
In its latest filing, the board opposes the Camardas' "fishing expedition" on the grounds that it will not produce evidence that is relevant to the case. Instead, the board says it intends to provide "solely" the transcription of the proceedings before the three-person disciplinary panel that first heard the Camardas' case and, also, that of the appeal before a five-member committee. It also said it would provide information on its compensation disclosure rules.
"Entirely ignoring the applicable scope of judicial review," the board writes, "plaintiffs have issued expansive discovery requests, subpoenas and deposition notices as though they are free to relitigate their disciplinary proceedings in a do over before this court." That amounts to a "complete waste of time because the court will not consider them," the filing adds.
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