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SEC to CFP Board: No Action Letter Means Brokers, Advisors Can Share Information

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On Tuesday the Certified Financial Planner Board of Standards, Inc. announced that The Securities and Exchange Commission sent a “No Action” letter to the board stating registered investment advisers, broker-dealers and their representatives could share information with the CFP Board relating to customer complaints, without fearing SEC enforcement action.

Now, firms that provide that CFP Board with information relating to customer complaints will not be violating customer privacy provisions of Regulation S-P. Previously when candidates went for CFP certification, the CFP Board conducted a background check and followed up on any complaints against a firm or individual. Frequently, broker-dealers and RIAs have cited Regulation S-P as preventing them from sharing such information with CFP Board, according to the SEC, which has caused delays in CFP Board's ability to process applications for certification, as well as delays in the 501(c)(3) non-profit organization's ability to investigate and possibly bring disciplinary actions against CFP professionals. The SEC’s No Action letter makes it clear that the commission will not bring any enforcement action against a broker-dealer or RIA that shares non-public personal customer information with the CFP Board.

“While Regulation S-P is intended to protect the privacy rights of customers, the No Action letter acknowledges that protecting the public from criminal and improper conduct is paramount to ensuring investor confidence,” reported the SEC.

“We appreciate the SEC staff's consideration of our policies and procedures with regard to conducting background checks of candidates for CFP certification and investigating allegations of misconduct by CFP professionals,” Kevin R. Keller, the CFP Board's CEO, said in a press release. “We believe this guidance from SEC staff will help candidates become certified more quickly while also resulting in stronger enforcement actions as now there is no longer a reason for firms to object to sharing customer complaint information with CFP Board.”

“We are often stymied in our investigations by firms citing Regulation S-P as the reason they cannot release relevant and pertinent information to us,” said Michael P. Shaw, Managing Director for Professional Standards and Legal.  “That will no longer be the case as broker-dealers and registered investment advisers are now in a position where they can assist CFP Board with our investigations.  The end result will be investigations that take less time to complete and I expect to see a significant reduction in the number of cases that we dismiss for lack of sufficient evidence.”

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