Jeff and Kim Camarda, two Florida-based advisors who filed a lawsuit against the CFP Board in June 2013 after being sanctioned by the organization for calling themselves "fee-only" advisors, are considering an appeal to a U.S. federal judge’s decision Monday to dismiss their claim. The advisors plan to review the court’s opinion, which was sealed to the public, before making a final decision.
“We are clearly disappointed in the decision and do not think it is correct if it rules that the CFP Board – being a private organization – has the prerogative to treat its licensees any way it wishes without any meaningful legal recourse to the judicial system available to certificants,” the advisors said, in a statement Wednesday.
In an order filed in the District of Columbia federal court, Judge Richard J. Leon granted the CFP Board’s motion to dismiss the case. His explanation behind the decision remains under seal, but he said he will likely make the documents public after the parties have a chance to argue for what they want to remain redacted.
The Camardas, who run Camarda Advisors and Camarda Consultants, filed the lawsuit two years ago, claiming the organization failed to provide a fair and just hearing before sanctioning them for their use of the term “fee-only” to describe their compensation model to clients.
The advisors claimed the organization’s disciplinary action and subsequent procedures violated the Board’s disciplinary guidance and polices, and damaged the Camardas’ reputation and competitive ability to run their businesses. The advisors alleged this is in violation of antitrust laws such as the Sherman Act and the Latham Act.
The CFP Board said Tuesday it was pleased that the judge dismissed the case without the need for a trial. "This ruling affirms CFP Board's authority to set and enforce its Standards of Professional Conduct, which serve as critical consumer protections," said Marilyn Mohrman-Gillis, managing director of public policy and communications at the CFP Board.
According to the amended complaint filed in January 2014, the CFP Board started to investigate the Camardas after receiving an anonymous complaint that the firm falsely advertised themselves as “fee-only” in connection with investment advice when they also provided commission-based services.
The Board’s investigation found probable cause, and the matter was referred to a disciplinary hearing in March 2012. But the Camardas claim they were not given a fair hearing, alleging the Board failed to properly conduct due diligence or speak with the firm’s clients to see if they were misled regarding their fee arrangements. Further, the Board failed to show any proof of a revenue-sharing arrangement between Camarda Advisors and Camarda Consultants.
The Camardas’ suit sought at least $75,000 in damages and attorneys’ fees, as well as an order rescinding the Board’s decision and voiding the corresponding disciplinary sanction.
Last May, after months of legal wrangling, the Camardas’ won a minor victory when the CFP Board released 300,000 pages of documents. The Camardas first requested the documents in November 2013, and filed a motion to compel in March.
Following requests from both sides for extensions, the CFP Board filed its motion for summary judgment under seal in December. On Monday, Judge Leon granted that request.
Judge Leon did offer both parties a chance to argue for redactions to the opinion before it is made public, but added “redaction is disfavored and must be supported by a persuasive rationale.”
This article was adapted from an earlier version, posted on July 7, 2015.
