What Happens At A Disciplinary Hearing Before A Hearing Panel Of The CFP Board?

This article will address:

• Defending a certified financial professional’s CFP designation at a disciplinary hearing before a CFP Board hearing panel;
• Formal complaints, by CFP Board staff attorneys, against CFP professionals, and answers by CFP professionals to such formal complaints; and
• Practical advice for CFP professionals who are engaged in disciplinary hearings.

The Certified Financial Planner Board of Standards, Inc. (the “CFP Board”) conducts disciplinary hearings and determines whether professionals holding Certified Financial Planner (“CFP”) certification have violated the CFP Board’s Code of Ethics (the “Code of Ethics”) and/or the CFP Board’s Standards of Conduct (the “Standards of Conduct”).  This article provides practical advice for CFP professionals who must defend their CFP designations at disciplinary hearings.

Responding To A Formal Complaint From A CFP Board Staff Attorney

• Your answer to a CFP Board staff attorney’s formal complaint must be specific and should resemble a closing statement in a jury trial.
• In this author’s view, a CFP professional should request an in-person disciplinary hearing. When an individual’s right to use the Certified Financial Planner marks is at stake, he or she requires the opportunity to confront a panel of other CFP professionals in person about the allegations of wrongful conduct.
• When you, the accused CFP professional, file your answer to CFP Board counsel’s formal complaint against you, request permission to appear before the hearing panel.

Important Pre-Hearing Deadlines

• Submit witness lists within 30 days after delivery of the complaint.
• Submit documents and supporting evidence within 45 days after delivery of the complaint.
• Pay the required hearing fee before the hearing date.
• For additional requirements and deadlines, review the Standing Order issued by the CFP Board’s Disciplinary and Ethics Commission.

Preparing for Your Disciplinary Hearing Before A CFP Board Hearing Panel

• Investigate the background and employment of potential hearing panelists.
• Review anonymous case histories (“ACHs”) on the CFP Board’s website.
• The ACHs will give you, the respondent CFP professional, some indication of how the CFP Board’s Disciplinary and Ethics Commission has decided cases with facts analogous to the facts of your case.
• Review the CFP Board’s Sanction Guidelines (the “Sanction Guidelines”) on the CFP Board’s website.
• The Sanctions Guidelines set forth a non-exhaustive list of factors that are potentially aggravating or mitigating.
• CFP Board counsel will prepare the DEC Book (pronounced “deck book”), which contains all relevant materials for the hearing, and will provide it to your counsel before the disciplinary hearing.
• Your counsel and the CFP Board staff attorney must estimate the time needed to present your case and the CFP Board’s case, respectively. Based on these estimates, your lawyer and CFP Board counsel must submit a joint notice of estimated time for the hearing.
• Prepare a testifying witness list and submit it to the CFP Board. The list must explain the nature of each witness’s anticipated testimony and whether each witness will appear live or, instead, by video conference or telephone.
• The CFP Board lacks the power to compel non-CFP professionals to appear and testify at a disciplinary hearing before a hearing panel of the CFP Board.
• Further, under New York law and in the absence of an underlying lawsuit or arbitration, your attorney lacks the authority to force individuals or companies to appear and testify at a disciplinary hearing before a CFP Board hearing panel.
• As a result, the witnesses who testify at your disciplinary hearing before a hearing panel of the CFP Board will likely be limited to you (the respondent CFP professional), other CFP professionals, and individuals or corporate representatives who appear voluntarily.

Conduct Of Disciplinary Hearings Before A Hearing Panel Of The CFP Board

• It is likely that your disciplinary hearing will take place in a conference room at the CFP Board’s headquarters in Washington, D.C.
• Persons present in the hearing room will include you (the accused CFP professional), your lawyer, the CFP Board staff attorney or attorneys, the hearing panel members, a stenographer, and possibly other CFP board staff.
• The hearing panel will determine, in its discretion, the conduct of the hearing, including the order of proof and allocation of time for argument and presentation of evidence.
• Your counsel, on your behalf, should orally deliver, to the hearing panel, both an opening statement and a closing statement. CFP Board counsel, too, will give an opening statement and a closing statement.  That said, the parties’ lawyers’ opening statements and closing statements will be shorter than in a trial, in court, before a jury.
• Your counsel, on your behalf, should present documents and testimony, and should cross-examine the CFP Board’s witnesses.
• Be prepared for your lawyer’s direct examination of you.
• Also be prepared to be cross-examined both by the CFP Board staff attorney and by the hearing panelists.
• The hearing panel is bound neither by rules of civil procedure nor by rules of evidence.
• You, the respondent CFP professional, should testify to the facts, in detail, directly to the hearing panel.
• The CFP Board staff attorney, in making the CFP Board’s case against you, is likely to utilize a lengthy PowerPoint presentation. You (the respondent professional), too, may use PowerPoint presentations or other demonstrative exhibits.

After the Disciplinary Hearing

• The hearing panel will make factual findings and recommendations to the CFP Board’s Disciplinary and Ethics Commission. The hearing panel will recommend to the Disciplinary and Ethics Commission whether to find a violation has occurred and whether there are grounds for professional discipline, and, if so, the appropriate discipline.
• The Disciplinary and Ethics Commission must review the hearing panel’s factual findings and recommendations de novo. De novo means that the Disciplinary and Ethics Commission must consider the matter anew, giving deference to the hearing panel’s determinations of witnesses’ credibility and to the panel’s procedural and evidentiary rulings.
• The Disciplinary and Ethics Commission may accept, reject, or modify the hearing panel’s recommendations or send the matter back to the hearing panel for further consideration.
• You, the CFP professional, must appeal the Disciplinary and Ethics Commission’s final order, if at all, within 30 days after the order is issued.

If you are a broker, financial advisor, or other certified financial planner and have received a notice of investigation or a formal complaint from the CFP Board, call New York City Professional Disciplinary Actions Lawyer David S. Rich at (347) 941-0760  today.