CFP Board Censures Improper CFP® Professional Conduct

Dec 29, 2015, 15:00 ET from Certified Financial Planner Board of Standards, Inc.

WASHINGTON, Dec. 29, 2015 /PRNewswire-USNewswire/ -- Certified Financial Planner Board of Standards, Inc. (CFP Board) announced today public disciplinary actions against the following individuals' right to use the CFP® certification marks, effective immediately or on the date noted in each case. Public disciplinary actions taken by CFP Board, in order of increasing severity, include letters of admonition, suspensions and permanent revocations.

This release contains information about disciplinary actions relating to 11 CFP® professionals. Of these actions, there were 3 administrative revocations, 4 suspensions, 1 interim suspensions and 3 letters of admonition.

The basis for each decision can be found in a Disciplinary Action Report below and on CFP Board's website. The public may check on an individual's disciplinary history and certification status with CFP Board at www.CFP.net/verify.

CFP Board's enforcement process is a critical consumer protection. CFP® professionals agree to abide by CFP Board's Standards of Professional Conduct (Standards), which includes the Code of Ethics and Professional Responsibility (Code of Ethics), Rules of Conduct and Financial Planning Practice Standards (Practice Standards). The Standards set forth the ethical standards for financial planners who hold the CFP® certification.

CFP Board enforces its ethical standards by investigating incidents of alleged unethical behavior by CFP® professionals. In cases where violations are found, the Disciplinary and Ethics Commission (Commission) may impose discipline ranging from a private censure or public letter of admonition to the suspension or revocation of the right to use the CFP® marks. CFP Board's Disciplinary Rules and Procedures (Disciplinary Rules) set forth the process for investigating matters and imposing discipline where violations have been found.

The actions in this release result from final decisions of the Commission.  

The Commission meets three times a year to provide a fair, unbiased review of any matter in which a CFP® professional is alleged to have committed violations of the Standards.  

The Commission functions in accordance with the Disciplinary Rules and reviews all matters on a case-by-case basis, taking into account the details specific to an individual case. While CFP Board has attempted to capture the details relevant to each decision, the summary nature of these releases may omit certain details affecting the decision. Accordingly, the decisions and/or rationale described in the releases may not apply to other cases reviewed by the Commission or reflect the Commission's future interpretation or application of the Standards.

STATE

NAME

LOCATION

DISCIPLINE

California

David L. Gabai

West Hills

Suspension

Connecticut

Michael John Smeriglio III

Greenwich

Interim Suspension

Florida

Marc H. Baldinger

Stuart

Administrative Revocation

Florida

Thomas W. Markowsky, CFP®

Orlando

Letter of Admonition

Florida

Ronald W. Vaught

Melbourne

Administrative Revocation

Hawaii

J. Michael Vaughn, CFP®

Lahaina

Letter of Admonition

Massachusetts

Richard A. Connell, CFP®

Hingham

Letter of Admonition

Minnesota

David E. Hitchcock

Spring Lake Park

Suspension

Nevada

Doyle H. Brown

Reno

Suspension

Texas

Richard D. Blair

Bee Cave

Suspension

Texas

Marcus C. Rodriguez

Houston

Administrative Revocation





PUBLIC LETTERS OF ADMONITION

CALIFORNIA

Thomas W. Markowsky, CFP® (Orlando): In June 2015, CFP Board's Disciplinary and Ethics Commission (Commission) ordered that a Public Letter of Admonition be issued to Mr. Markowsky. This discipline followed the Commission's findings that Mr. Markowsky filed Chapter 7 Bankruptcy in 1997 and again in 2014, which reflected adversely on his integrity and fitness as a CFP® professional, upon the CFP® marks and upon the profession. The Commission noted that while both bankruptcies had mitigating factors, the 2014 bankruptcy was due in part to unwise financial planning decisions with respect to Mr. Markowsky's personal affairs.  Mr. Markowsky's conduct violated of Rule 6.5 of CFP Board's Rules of Conduct, providing grounds for discipline pursuant to Article 3(a) of CFP Board's Disciplinary Rules and Procedures. Accordingly, the Commission admonished Mr. Markowsky with regard to the above-mentioned conduct.

HAWAII

J. Michael Vaughn, CFP® (Lahaina): In June 2015, CFP Board's Disciplinary and Ethics Commission (Commission) accepted an offer of settlement pursuant to which it issued a Public Letter of Admonition to Mr. Vaughn. In the offer of settlement, Mr. Vaughn consented to CFP Board's findings that he effected 20 discretionary transactions in three different customer accounts without obtaining prior written authorization from the customers and without having the accounts accepted as discretionary accounts by his firm.  Mr. Vaughn admitted he executed transactions without obtaining prior written authorization, but stated that he had received verbal authorization and was acting in the best interest of his client.  Mr. Vaughn's firm terminated him for cause based on his conduct.

Mr. Vaughn consented to violations of Rules 4.3, 4.4, 5.1 and 6.5 of CFP Board's Rules of Conduct, providing grounds for discipline pursuant to Articles 3(a) and 3(d) of CFP Board's Disciplinary Rules and Procedures. Accordingly, the Commission admonished Mr. Vaughn with regard to the above-mentioned conduct.

MASSACHUSETTS

Richard A. Connell, CFP® (Hingham): In June 2015, CFP Board's Disciplinary and Ethics Commission (Commission) accepted an offer of settlement pursuant to which it issued a Public Letter of Admonition to Mr. Connell. In the offer of settlement, Mr. Connell consented to CFP Board's findings that he entered into a Letter of Acceptance, Waiver and Consent with the Financial Industry Regulatory Authority, Inc. (FINRA) for failing to amend his Form U4 in a timely manner to disclose his 2009 Chapter 7 bankruptcy filing.  Mr. Connell agreed to a one-month suspension from association with any FINRA member in any capacity and $5,000 fine.  Mr. Connell's conduct violated Rule 6.5 of CFP Board's Rules of Conduct, providing grounds for discipline pursuant to Articles 3(a) and 3(d) of CFP Board's Disciplinary Rules and Procedures. Accordingly, the Commission admonished Mr. Connell with regard to the above-mentioned conduct.

INTERIM SUSPENSION

CONNECTICUT

Michael John Smeriglio III (Greenwich): In May 2015, CFP Board issued Mr. Smeriglio an automatic interim suspension of his CFP® certification.  CFP Board issued an interim suspension after discovering that Mr. Smeriglio entered into a Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority, Inc. (FINRA) wherein he accepted and consented to, without admitting or denying, FINRA's findings that during the course of an investigation into allegations that Mr. Smeriglio converted customer funds from the customer's Estate and Trust he did not provide the information requested by FINRA. FINRA issued to Mr. Smeriglio a permanent bar from associating with any FINRA member in any capacity. Pursuant to Article 5.7 of CFP Board's Disciplinary Rules and Procedures, "[a]n interim suspension shall immediately be issued without a hearing when CFP Board Counsel receives evidence of a conviction or a professional discipline in accordance with Article 13.1 for…revocation of a financial professional license (securities, insurance, accounting or bank-related license)." Under the interim suspension order, Mr. Smeriglio's CFP® certification is suspended pending CFP Board's completed investigation and possible further disciplinary proceedings. The interim suspension order became effective on May 28, 2015. 

SUSPENSIONS

CALIFORNIA

David L. Gabai (West Hills):  In July 2015, following a review by CFP Board's Disciplinary and Ethics Commission (Commission), CFP Board issued an order suspending Mr. Gabai's right to use the CFP® certification marks for five years. This discipline followed the Commission's findings that Mr. Gabai entered into a letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority, Inc. (FINRA, formerly known as the National Association of Securities Dealers or NASD) in which FINRA permanently barred Mr. Gabai from association with any FINRA member in any capacity for using and employing deceptive, fraudulent and manipulative devices and schemes involving the purchase and sale of a stock, constituting a willful violation of Securities and Exchange Commission, FINRA and NASD rules. The Commission also found that Mr. Gabai failed to disclose the FINRA suspension to CFP Board in writing within 30 days. Mr. Gabai's conduct violated Rules 4.3 and 4.4 of CFP Board's Rules of Conduct, providing grounds for discipline under Articles 3(a), 3(d) and 3(e) of CFP Board's Disciplinary Rules and Procedures. Mr. Gabai's suspension is effective from August 30, 2015 until August 30, 2020.

MINNESOTA

David E. Hitchcock, (Spring Lake Park): In October 2015, CFP Board's Disciplinary and Ethics Commission (Commission) accepted an offer of settlement pursuant to which it issued a one-year suspension to Mr. Hitchcock. In the offer of settlement, Mr. Hitchcock consented to CFP Board's findings that he: 1) misrepresented an alternative investment as a low risk investment to two clients; 2) failed to exercise reasonable and prudent professional judgment and act in the clients' interest when he recommended and sold an alternative investment to two clients who had a low risk tolerance and which resulted in an unsuitable concentration of the clients' net worth in one product; 3) failed as a financial planning practitioner to communicate his recommendation of the alternative investment in a manner and to an extent reasonably necessary to assist his clients in making an informed decision; and 4) failed as financial planning practitioner to select appropriate products and services that were consistent with the clients' goals, needs and priorities because he recommended and sold an alternative investment to two clients who had a low risk tolerance and which resulted in an unsuitable concentration of the clients' net worth in one product.  Mr. Hitchcock consented that his conduct violated Rules 102, 201, 202 and 703 of CFP Board's Code of Ethics and Professional Responsibility and Financial Planning Practice Standards 400-3 and 500-2, providing grounds for discipline pursuant to Articles 3(a) and 3(b) of CFP Board's Disciplinary Rules and Procedures. Mr. Hitchcock's suspension is effective from October 20, 2015 until October 20, 2016.

NEVADA

Doyle H. Brown (Reno):  In July 2015, CFP Board's Disciplinary and Ethics Commission (Commission) issued an order suspending Mr. Brown's right to use the CFP® certification marks for one year and one day. The Commission found that Mr. Brown engaged in conduct that reflected adversely on his integrity, the CFP® marks and the profession by failing to file taxes for a number of years and having an outstanding amount owed to the Internal Revenue Service in excess of $136,000. Mr. Brown's conduct violated Rule 6.5 of CFP Board's Rules of Conduct, providing grounds for discipline under Article 3(a) of CFP Board's Disciplinary Rules and Procedures. Mr. Brown's suspension is effective from August 30, 2015 until August 31, 2016.

TEXAS

Richard D. Blair (Bee Cave):  In July 2015, CFP Board's Disciplinary and Ethics Commission (Commission) issued an order suspending Mr. Blair's right to use the CFP® certification marks for four years. The Commission found that Mr. Blair was sanctioned by the Texas State Securities Board (TSSB) for choosing to sell his clients shares of a Real Estate Investment Trust (REIT) at a higher share price that paid a commission when he could have sold the clients the same REIT at a lower share price that did not pay a commission.  At the same time Mr. Blair charged some of the clients a management fee on the REIT shares in addition to a commission he received from the sale of the REIT shares.  As a result of the conduct, the TSSB ordered Mr. Blair to reimburse clients who paid a commission and a management fee. 

The Commission found that Ms. Blair failed to make timely payments to reimburse clients as required by the TSSB. 

The Commission also found that Respondent failed to timely report to the Financial Industry Regulatory Authority, Inc. (FINRA) securities-related civil litigation that was settled and multiple customer complaints.  The Commission found that Mr. Blair's conduct violated Rule 607 of CFP Board's Code of Ethics and Rule 6.5 of CFP Board's Rules of Conduct, providing grounds for discipline under Articles 3(b) and 3(d) of CFP Board's Disciplinary Rules and Procedures. Mr. Blair's suspension is effective from August 23, 2015 until August 23, 2019.

ADMINISTRATIVE REVOCATIONS

FLORIDA

Marc H. Baldinger (Stuart): In May 2015, CFP Board issued an order permanently revoking Mr. Baldinger's right to use the CFP® certification marks. This discipline followed Mr. Baldinger's failure to file an answer to CFP Board's Complaint within the required time period. CFP Board's Complaint alleged that Mr. Baldinger entered into a Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority, Inc. (FINRA) wherein he consented, without admitting or denying the findings that he engaged in private securities transactions without prior approval of his employer, failed to disclose to his employer his position as managing partner of two limited liability companies and opened an account with a broker-dealer other than his employer without notifying his employer or the broker-dealer, in violation of National Association of Broker-Dealers (NASD) and FINRA rules. CFP Board's Complaint alleged Mr. Baldinger's conduct violated Rules 4.3 and 5.1 of the Rules of Conduct and provided grounds for discipline under Articles 3(a) and 3(d) of CFP Board's Disciplinary Rules and Procedures.  Mr. Baldinger failed to file an Answer to CFP Board's Complaint within 20 calendar days of the date of service, as required by Article 7.3 of CFP Board's Disciplinary Rules and Procedures. In accordance with Article 7.4 of the Disciplinary Rules and Procedures, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation. Mr. Baldinger's revocation was effective as of June 18, 2015.

Ronald W. Vaught (Melbourne): In June 2015, CFP Board issued an order permanently revoking Mr. Vaught's right to use the CFP® certification marks. This discipline followed Mr. Vaught's failure to file an answer to CFP Board's Complaint within the required time period. CFP Board's Complaint alleged, among other things, that Mr. Vaught entered into a Letter of Acceptance, Waiver and Consent with the Financial Industry Regulatory Authority, Inc. (FINRA) wherein he consented, without admitting or denying the findings, to FINRA's findings that he failed to notify his employer that he was named as a successor trustee and beneficiary of a client's trust, falsified a business document and improperly used a client's funds in violation of FINRA rules resulting in a permanent bar from FINRA. CFP Board's Complaint alleged that Mr. Vaught's conduct violated Rules 1.4, 4.1, 4.3, 4.4 and 5.1 of the Rules of Conduct and provided grounds for discipline under Articles 3(a), 3(d), 3(e) and 3(f) of CFP Board's Disciplinary Rules and Procedures.  Mr. Vaught failed to file an Answer to CFP Board's Complaint within 20 calendar days of the date of service, as required by Article 7.3 of Disciplinary Rules and Procedures.  In accordance with Article 7.4 of the Disciplinary Rules and Procedures, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation. Mr. Vaught's revocation was effective as of July 2, 2015.

TEXAS

Marcus C. Rodriguez (Houston): In June 2015, CFP Board issued an order permanently revoking Mr. Rodriguez's right to use the CFP® certification marks. This discipline followed Mr. Rodriguez's failure to file an answer to CFP Board's Complaint within the required time period. CFP Board's Complaint alleged that Mr. Rodriguez violated Rule 4.3, 4.4 and 4.6 of CFP Board's Rules of Conduct when he was the subject of a Default Decision from the Financial Industry Regulatory Authority, Inc. (FINRA) resulting in a two year suspension and $50,000 fine. The Complaint alleged that Mr. Rodriguez's conduct violated Rules 4.3, 4.4 and 4.6 of the Rules of Conduct and provided grounds for discipline under Articles 3(a), 3(d) and 3(f) of CFP Board's Disciplinary Rules and Procedures. Mr. Rodriguez failed to file an Answer to CFP Board's Complaint within 20 calendar days of the date of service, as required by Article 7.3 of the Disciplinary Rules and Procedures. In accordance with Article 7.4 of the Disciplinary Rules and Procedures, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation. Mr. Rodriguez's revocation was effective as of July 2, 2015.

ABOUT CFP BOARD

The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board's mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.  CFP Board currently authorizes approximately 73,000 individuals to use these marks in the U.S.

 

SOURCE Certified Financial Planner Board of Standards, Inc.



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