Ron Rhoades declines to serve as NAPFA chair

Compliance violation thwarts adviser's leadership run

Aug 20, 2012 @ 5:35 pm

By Darla Mercado

Ron A. Rhoades, outspoken fiduciary advocate and chairman elect of the National Association of Personal Financial Advisors, has backed off from taking the leadership position. In a letter to members of the press on Monday afternoon, Mr. Rhoades said he and his firm, ScholarFi Inc., where he serves as the chief compliance officer and president, had committed a compliance violation by failing to timely file registration papers with Florida's state division of securities. Mr. Rhoades said that his firm was formed last September as a state registered firm in New York. At its formation, ScholarFi took a total of 11 clients from Florida, which exceeds the de minimis five-client threshold for registration in that state. While Mr. Rhoades considered in late summer of 2011 whether to register in Florida, he erroneously believed that he could wait until the first quarter of this year to register with the state. The registration documents were submitted to Florida in February of this year, but in late May, Mr. Rhoades became aware of his error. “While my mistake was unintentional, the violation of compliance regulations is nevertheless material in nature,” he said in his letter. “The mistake made was mine, and mine alone. I accept full responsibility for my personal mistake and all consequences that may flow therefrom,” Mr. Rhoades wrote, “including the decision by NAPFA to move on without me serving as chair in the coming year.” Mr. Rhoades was supposed to take on his new duties at NAPFA on Sept. 1. “It is with regret that Ron Rhoades has resigned from the NAPFA board and as chair-elect,” NAPFA wrote in a statement. “Ron informed NAPFA of this violation and the National Board has decided to move on in 2012-13 without Ron as the Chair.” NAPFA's board will hold a special election next month to fill the position, but in the meantime, Susan John, founder and president of the organization, will helm the group as chair.

Ron Rhoades' Letter to the Press

August 20, 2012

To Interested Members of the Press:

Over the past several weeks I discerned that I and my firm (of which I serve as Chief Compliance Officer and President) had committed a compliance violation by failing to timely file registration papers with the State of Florida Division of Securities.

My firm was formed in September 2011 as a state-registered firm in New York. At the time of formation, the firm accepted a total of 11 clients from Florida, which exceeds the de minimis threshold for registration in the State of Florida (which is five clients). I had considered in the late summer of 2011 whether to register in Florida, but mistakenly believed that I could wait until the first quarter of 2012 to register with the state.

Registration documents were submitted to the state in February 2012, but in late May 2012 I was made aware of my mistake. Since then I have undertaken candid disclosures of all requested facts to the state, and I await their final determination of this matter.

While my mistake was unintentional, the violation of compliance regulations is nevertheless material in nature. The mistake made was mine, and mine alone. I accept full responsibility for my personal mistake, and all consequences that may flow therefrom, including the decision by NAPFA to move on without me serving as chair in the coming year.

Sincerely,

Ron A. Rhoades, JD, CFP

President, ScholarFi, Inc.

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