The Securities and Exchange Commission has expanded the CFP Board of Standards' power to discipline advisors now that it has made it clear that RIAs and broker-dealers can provide client information to the board without violating a privacy rule and facing an SEC enforcement action.
Advisors often have cited Regulation S-P, a federal privacy rule, as the reason they could not share client information with the Board concerning a customer complaint. But recently the SEC sent the Board a "No Action" letter that says the SEC staff will not bring an enforcement action against a broker-dealer or registered investment advisors that shares non-public personal customer information with CFP Board. While Regulation S-P is intended to protect the privacy rights of customers, the No Action letter acknowledges that protecting the public from criminal and improper conduct is paramount to ensuring investor confidence, the Board says.
"We are often stymied in our investigations by firms citing Regulation S-P as the reason they cannot release relevant and pertinent information to us," says Michael P. Shaw, the Board's managing director for professional standards and legal. "That will no longer be the case as broker-dealers and registered investment advisors are now in a position where they can assist CFP Board with our investigations. The end result will be investigations that take less time to complete and I expect to see a significant reduction in the number of cases that we dismiss for lack of sufficient evidence."
In addition to investigating allegations of misconduct, the Board also conducts background checks of candidates for CFP certification. "We believe this guidance from SEC staff will help candidates become certified more quickly while also resulting in stronger enforcement actions as now there is no longer a reason for firms to object to sharing customer complaint information with CFP Board," says Board CEO Kevin R. Keller, CAE.