As a follow up to my blog of two weeks ago, Camardas 1: CFP Board 0. Where Does the Board Go From Here?, about court rulings on a number of motions by Jay and Kim Camarda in their lawsuit against the CFP Board, I talked with advisory attorney Brian Hamburger. We discussed the case, and in particular my suggestion that the Board should settle with the Camardas, admit its mistakes and revamp its oversight of CFP’s use of the term “fee-only.”
(Yes, it would have been better to speak with Brian before I wrote my blog, but he’s a busy guy, and couldn’t talk until after my deadline. Besides, Brian’s also a loquacious guy, and his astute insights are more than enough to warrant their own space.)
Brian Hamburger is the founder of the New Jersey-based Hamburger Law Firm and its affiliate MarketCounsel, which offers RIA compliance services. “Legal or regulatory actions against an advisor can be very costly,” he told me about Market Counsel, years ago, “and frankly, we got tired of being called in to clean up the messes. So we designed an ongoing program to economically help advisors with compliance on the front end, so they can avoid costly issues down the road.”
Having worked in his father’s insurance and advisory firm for some years before heading to law school, and working at the SEC’s Enforcement division while getting his JD, Brian brings a unique perspective to advisor regulation: an understanding of the advisory business from the ground up and advisory enforcement from the top down.
Over the years I’ve known him, I’ve always found Brian’s candid observations about advisor regulation insightful and right to the heard of the matter. He didn’t disappoint in our discussion about the Camardas and the CFP Board.
Hamburger said that he wasn’t surprised by the Camarda suit. “For some time [the Board] has acted as judge and jury. They have been unaccountable to their CFPs and they have been ridiculously heavy handed and uncooperative. If they are going to restrain their members that way, you had to think there would come a time when someone would challenge them.”
Which brought us to the Camarda lawsuit. “This lawsuit is an accountability test: has the CFP Board’s oversight been misplaced?” he said. “It’s an antitrust issue. They are the only regulator of financial planners. Are they allowing some CFPs to use this quasi-regulator for anticompetitive behavior or unfair competition? In our experience with the CFP Board, it has seemed as if they handled advisors affiliated with firms that have deep pockets very differently than they did mom and pop advisory firms.”