CFP Board’s director of investigations exits

Rex Staples, director of investigations for the Certified Financial Planner Board of Standards Inc., will be leaving his post as of Sept. 6.
The CFP board is currently searching for a replacement.
Mr. Staples “is leaving to become more involved in complex areas of securities regulation and administration,” said Dan Drummond, a spokesman for the CFP Board, in a statement.
Mr. Staples, who did not return calls to comment, joined the organization in April of last year to take on his newly created role, creating some fanfare at the time about whether the board would be more active in flexing its enforcement muscles.
In an interview with InvestmentNews last year, Mr. Staples, the former general counsel of the North American Securities Administrators Association Inc. and past enforcement chief for the Washington State Securities Division, said he wanted to see a quicker turnaround of CFP-related cases, and fair penalties executed without delay.
The issue of fairness, has dogged the CFP board’s disciplinary process since last November when Alan Goldfarb, the CFP board’s then chairman, resigned after a disciplinary proceeding against him was announced.
In June, the board’s disciplinary panel concluded the case by issuing a public letter of admonishment to Mr. Goldfarb, saying he had misrepresented his compensation as “fee-only” since he was also part owner of a broker-dealer that could receive commissions.
Mr. Goldfarb, who late last year founded the Financial Strategies Group LLC in Dallas, did not appeal the case. But he has been outspoken in his disagreement with the panel, saying he was paid a salary at his former firm.
Mr. Staples may be “rethinking” his role with the CFP Board, Mr. Goldfarb told InvestmentNews, “but that’s just speculation on my part.”
The change raises more questions about the CFP Board’s enforcement efforts, “but people move on to new things for lots of reasons,” said Michael Kitces, a partner at the Pinnacle Advisory Group, Inc.
Separately, a long-simmering dispute between an advisory firm and the CFP Board, which appears to have precipitated Mr. Goldfarb’s resignation, has just recently come to light.
CFP holders Jeffrey Camarda, chairman of Camarda Wealth Advisory Group in Fleming Island, Fla., and his wife, Kimberly Camarda, president of the firm, are suing the CFP Board in federal court over a disciplinary case the board brought against them in 2011.
Like Mr. Goldfarb, the board says they improperly used the term “fee-only” to describe their compensation.
The CFP Board issued an order in March 2012 finding that the Camardas had misrepresented their compensation because they also owned a commission-based insurance agency called Camarda Consultants.
The Camardas appealed, but in January a CFP Board appeals panel ruled against them.
As a result, the Camardas filed a lawsuit in June, asking the court to reverse the case and block the board from issuing a public admonishment.
The court filings reveal that the Camardas raised the issue of compensation-disclosure hypocrisy involving the CFP Board itself in their hearing before a board disciplinary panel, which occurred before the March 2012 finding.
“Evidence was presented during the extensive proceedings which demonstrated at least two of the [board] hearing officers had done the same thing as the Camardas,” their lawsuit says.
Mr. Goldfarb said the Camarda case sparked the organization to look into the entire board for similar issues regarding compensation disclosures.
“There was an internal investigation, of all board members, who could potentially have been in a similar situation,” he said.
Two members of the CFP Board’s Disciplinary and Ethics Commission also resigned at the same time as Mr. Goldfarb.
Regarding his lawsuit, “I refuse to have my reputation impugned over an unfair and capricious process,” Mr. Camarda said in a statement.
The Camardas’ complaint “is without merit,” the CFP Board’s Mr. Drummond countered.
The board has yet to release any of its conclusions from the Camarda case. But some details of the dispute can be seen in court filings.
In a July filing, the CFP Board said that “Camarda Advisors and Camarda Consultants are functionally one organization” and had a “mutual referral fee arrangement.”
The Camardas claim the CFP Board “failed to present or even consider any evidence as to whether Camarda Advisors and Camarda Consultants were, in fact, separate entities” or had a revenue-sharing arrangement.
But the Camardas may have a high hurdle to overcome.
The fact that clients are not shared, or never pay commissions, is irrelevant, Mr. Kitces said.
Only pure, independent RIAs can use the fee-only moniker under the CFP Boards interpretation, he said.
Earlier this month, the CFP Board hosted a webinar for CFP holders on how to avoid misleading compensation disclosures, and issued a related notice .
“Any CFP professional working for an organization that has a broker-dealer subsidiary or affiliate must include “commission” as part of his/her compensation disclosure,” the notice said.
“This interpretation has been kind of a bombshell in the advisory world” where many CFP holders are affiliated with broker-dealers, Mr. Kitces said.