The Certified Financial Planner Board of Standards Inc. released 300,000 pages of documents to the couple suing the organization over its compensation definitions, marking an advance in a case that is potentially becoming costly for the organization.
The organization turned over the documents to the couple, Jeffrey and Kimberly Camarda, to satisfy what it called in a statement, “the extremely broad discovery requests the Camardas issued to CFP Board.”
In a court filing on April 7, the CFP Board said that it had assembled a group of attorneys to conduct the extensive document review. They have put in 2,000 attorney hours and 200 paralegal hours. “This effort has been very expensive,” the CFP Board stated in the filing.
The organization declined to say just how expensive. A document review is usually conducted by contract attorneys, who cost less than law-firm partners. Assuming that the hourly rate for a contract attorney could range from $100 to $200 per hour – including the charge for the law firm staff overseeing the work – the cost for the CFP Board could be in the range of $200,000 to $400,000, according to legal experts who didn't want to be identified commenting on other firms' costs.
“CFP Board is carefully and efficiently managing litigation costs while at the same time we are vigorously defending our right to set and enforce our rules,” CFP Board spokesman Dan Drummond said in an e-mail statement.
The documents will remain sealed during the litigation under a confidentiality request made by both parties and signed by a judge.
A spokesman for the Camardas was not immediately available for comment.
The Camardas originally filed a suit against the CFP Board last summer, alleging that the organization had unfairly disciplined them for violating its rules. The board found that the Camardas, who are managing members of Camarda Financial Advisors, held themselves out as fee-only advisers when an arm of their firm, Camarda Consultants, sells insurance for commissions.
In January, Judge Richard J. Leon of the U.S. District Court in the District of Columbia ruled that the Camardas can
seek monetary damages and pursue antitrust violations against the CFP Board.
The CFP Board has been struggling with controversies over compensation definitions ever since it first filed its case against the Camardas in March 2011.
In November 2012, the organization removed Alan Goldfarb as its chairman for mischaracterizing his compensation on the Financial Planning Association website.
Last September, the CFP Board
temporarily removed the “fee-only” description from its website and told the 8,000 CFPs using the label to re-evaluate whether they complied with CFP rules before resetting the label on their profiles.
The CFP Board grants the CFP mark and upholds the ethical and education standards surrounding it. There are about 69,000 CFPs in the United States.
