On May 16, 2023, the Certified Financial Planner Board of Standards, Inc. (the “CFP Board”) adopted revised Procedural Rules addressing procedures for investigating alleged misconduct and enforcing the CFP Board’s Code of Ethics and Standards of Conduct “Code and Standards”). The revised Procedural Rules will transfer some administrative functions from the Enforcement Department to the Adjudication Department and expand the role of Disciplinary and Ethics Commission (DEC) Counsel in an effort to make the adjudication process more efficient, eliminate settlement counteroffers, enable pre-investigation outreach and establish a process for admitting expert testimony. The changes to the Procedural Rules will become effective on September 1, 2023, and will cover all pending proceedings and those commenced thereafter.
Specifically, the CFP Board made the following changes to its Procedural Rules, which may impact CFP® professionals who are the subject of an investigation for potential violation of the Code and Standards, or whose conduct may reflect adversely upon the profession or the CFP® certification marks:
- Modified the Duty of Cooperation set forth in Article 1.3. of the Procedural Rules to provide that a Respondent is required to produce only those documents and information that are in Respondent’s control (the prior language required production of documents in Respondent’s possession, custody or control). As a result, a Respondent does not violate the Duty of Cooperation by failing to produce documents in Respondent’s possession if Respondent’s firm controls the documents and Respondent’s firm does not consent to the production of the documents.
- Modified the language in Article 2.1.b.2. to make clear that DEC Counsel may deliver an Interim Suspension Order if Respondent is the subject of a Civil Finding that Respondent engaged in fraud, theft, misrepresentation or other dishonest conduct.
- Modified the deadlines, set forth in Article 10.3., for filing documents, witness notifications, written statements and stipulations. The revised deadline is 60 days before the first day of the range of projected hearing or review dates.
- Revised the language in Article 10.3.c.2., which provides that a party has 14 days to oppose a Motion for Leave to Introduce Expert Witness, to specify that DEC Counsel may extend but not shorten this response deadline.
- Deleted Article 14.3., which identified factors relevant to rehabilitation and fitness, because the factors relevant to rehabilitation and fitness are set forth in Article 11.8.
- Modified the language in Article 15.3 that defines the substantial evidence required for the Appeals Commission to accept the DEC’s factual findings on appeal. Prior to this modification, the Procedural Rules defined substantial evidence as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” This language has been modified to change “reasonable mind” to “reasonable person.”
- Modified Article 17.3.b. by extending the deadline from 7 to 14 days for a party to request a recusal of a potential member of the Hearing Panel, the DEC, the Settlement Review Panel and/or the Appeals Commission.
- Added the definition of de novo to Article 17.10., which provides that a Hearing Panel may consider de novo and modify or reverse DEC Counsel’s resolution of any motion or objections made pursuant to the Procedural Rules. De novo means that the DEC must consider the matter anew, as if DEC Counsel had not resolved the motion or objections.
The revised Procedural Rules reflect the CFP Board’s ongoing efforts to ensure that CFP® professionals adhere to rigorous standards of conduct and uphold the public trust. These changes are designed to update investigation and enforcement operations to enhance the benefit to the profession and the public, while also striving to be fair to CFP® professionals. Of particular importance to registered representatives associated with broker-dealers, the revised Procedural Rules tacitly acknowledge that their duty of cooperation does not extend to the production of customer documents that are in their firm’s control, and not theirs.
The Procedural Rules are available here. For any questions regarding these recent updates or assistance with CFP Board investigations, please contact David Hantman or Alexander Middlemiss.