CFP Board lays out penalties for violations

Declaring bankruptcy two or more times would lead to the revocation of the CFP credential, while breaching fiduciary duty would result in a three-month suspension, under penalties developed by the organization that grants the certification. This week, the Certified Financial Planner Board of Standards Inc. proposed sanction guidelines for 40 types of misconduct for its Disciplinary and Ethics Commission to consider when punishing financial planners who violate the CFP ethics code. The guidelines were developed over the past four years by reviewing decisions reached by the disciplinary panel, according to Michael Shaw, the CFP Board's managing director of professional standards and legal. “In determining whether to impose a sanction in a particular case, the commission has in the past relied on CFP Board's anonymous case histories for guidance,” Mr. Shaw wrote in an e-mailed statement. “The sanction guidelines are being proposed as another tool the commission can use to ensure that CFP Board's enforcement process remains expedient, consistent and fair for all participants and credible to the public.” The proposed punishments range from revocation of the CFP mark for setting up a Ponzi scheme to a private censure for books and records violations or a misdemeanor criminal conviction to a public letter of admonition for a securities law violation. The disciplinary commission can consider aggravating and mitigating circumstances. The CFP Board will take written comments from CFP professionals on the sanctions guidelines until May 30. The CFP Board's directors are expected to vote on the proposal in July. Last month, the CFP Board approved a new bankruptcy disclosure policy, changes to the CFP experience requirement and amendments to its disciplinary rules and procedures. This year, the CFP Board is expected to seek comments on modifications to its continuing education rules and to its disciplinary-appeals process. The CFP Board grants CFP certification and enforces the related ethical requirements for the approximately 63,000 U.S. investment advisers who hold the mark.