The Certified Financial Planner Board of Standards internal procedures for disciplinary action against its certificate holders are fair and equitable, a federal district court judge ruled.
Judge Richard J. Leon of the United States District Court for the District of Columbia said in the decision—issued two weeks ago, but unsealed Tuesday—that the board is a private organization and the court will not interfere in its internal workings.
The Camarda’s filed suit after the board threatened to discipline them for using the term fee-only to describe their practice even though they also own an insurance agency that makes commissions. The situation erupted into a national controversy among financial planners after other planners also were disciplined.
The decision said the Camardas had presented no evidence that the board was not dealing fairly and equitably with its charter holders. They also showed no evidence the board was dealing in bad faith or was guilty of conduct that was arbitrary or capricious, the court said.
In the decision, Leon noted that the CFP Board “followed its own rules throughout the disciplinary proceedings” against the Camardas. The court also found “no evidence that [the CFP Board] was motivated by bad faith or ill will” in disciplining the Camardas. Leon rejected the Camarda’s breach of contract claim against the board, as well as their claims that the board unfairly competed against them and engaged in false advertising by stating that it fairly enforces its disciplinary rules.
The CFP Board, which has withheld comment on the decision pending the unsealing of the decision, hailed the decision as a victory on Tuesday.
“This is a significant victory for CFP certification, for CFP Board and for CFP professionals,” said CFP Board Chairman Richard P. Rojeck. “It affirms the integrity of the CFP certification and CFP Board’s role as the standard-setting body for personal financial planners.
“CFP Board’s peer-review disciplinary process allows CFP professionals to determine when one of their peers has violated CFP Board’s rules of conduct. As a result of the court’s decision, the public will be protected because CFP professionals will continue to be held accountable when their peers have found that they deserve to be sanctioned for their conduct,” Rojeck added.
The Camardas said in a statement issued Tuesday that the decision did not resolve the merits of their case, but only said the CFP Board has a right to enforce its own rules.
“We disagree with the judge’s decision, and think it ominous for the emerging profession, and for the public it would serve,” they said. The court did not look at the case itself or the evidence, the Camardas said. “It merely ruled the CFP Board could do whatever it pleases.”