Creative Planning fined for failure to monitor radio ads and its president's personal accounts

SEC issues cease-and-desist order; Kansas-based RIA and Peter A. Mallouk required to pay civil penalties

Sep 19, 2018 @ 5:00 pm

By Sarah Min

The Securities and Exchange Commission issued a cease-and-desist order against Creative Planning Inc. for distributing radio advertisements with prohibited client testimonials.

According to the Securities and Exchange Commission, the Kansas-based registered investment adviser firm distributed hundreds of radio advertisements and failed to monitor prohibited client testimonials. The firm also failed to keep accurate records of their own holdings, specifically firm president Peter Mallouk's personal accounts with CPI.

Mr. Mallouk and Creative Planning could not be reached for comment.

CPI started airing live and pre-recorded radio advertisements for the firm in 2015 with two radio hosts in the Kansas City area. However, when one of the radio hosts became a client of CPI in 2016, CPI failed to review their advertisements with the radio station, which began including the radio host's own testimonials regarding his personal experiences with CPI. This was in violation of the Advisers Act and CPI's own internal policies and procedures.

Also, Mr. Mallouk, who had been president of CPI since 2003, was charged for failing to report to his firm securities holdings and transactions from three personal securities accounts he was managing for the benefit of his family from 2013 to 2015.

CPI has approximately $36.2 billion in regulatory assets under management.

The SEC has determined to settle with CPI and Mr. Mallouk. CPI is censured and required to cease and desist from further violations of the Advisers Act and required to pay $200,000 to the SEC in civil penalties.

Mr. Mallouk has also been issued a cease-and-desist order and is required to pay a civil penalty of $50,000 to the SEC within 10 days of the order.


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