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Camardas Amend Court Filing to Block Client List From CFP Board

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Jeffrey and Kimberly Camarda, the two CFPs embroiled in a legal battle with the Certified Financial Planner Board of Standards over their alleged violation of the Board’s fee-only definition, on Monday withdrew their anti-competitive claim against the Board in order to protect their clients’ information.

The move from the Camardas comes just a week or so after the CFP Board filed a motion in the U.S. District Court for the District of Columbia asking the Camardas to hand over their client information, a request that raised questions about privacy rules.

“After a great deal of consideration, Kim and I have reluctantly decided to withdraw our Sherman Act claim of anti-competitive practice by CFP Board,” the Camardas said in a Monday statement that was shared with ThinkAdvisor. “Our overwhelming motivation for this is a deep desire to protect the integrity of the confidentiality of our clients and others who have entrusted their private information to us.”

The CFP Board’s “attempts to discover our clients’ intimate financial and other information have been extremely troubling to us. We are adamant that we have a legal, moral and ethical duty to protect this information, and we fervently believe that CFP [Board] has no enforceable right to this data.”

A spokesperson for the Camardas told ThinkAdvisor that the Monday filing amends the original Camardas’ complaint by pulling out the Sherman Act portion. The Sherman Antitrust Act is what the CFP Board “was using as their rationale for requesting rather extensive and intrusive amounts of client information” from the Camardas, the spokesperson said.

The Camardas said in their statement that because the CFP Board “has publicly stated it needs this [client] information to defend itself against the Sherman Act claim, and with our withdrawal of this claim we reasonably expect it will rescind its request for it.”

CFP Board spokesman Dan Drummond told ThinkAdvisor on Sept. 2 that because the court “allowed the Camardas to pursue their antitrust and Lanham Act claims, it was clear that the parties would need to exchange confidential information.”

Said the Camardas in their Monday statement: “We take this action to retract the Sherman Act claim out of duty to our clients. Ultimately, our duty to them far exceeds our own desire for justice.”

CFP Board said in a Monday statement that it “supports the dismissal” of Count V (violation of the Sherman Act section 1), and Count VI (violation of the Sherman Act section 2).

However, “as for the identity and location of the Camardas’ clients”, the Board continued, “that information is highly relevant to claims that still remain before the court. Discovery requests for client lists and related information are common in litigation involving Lanham Act claims and in cases where, like here, plaintiffs contend that their business relationships have been damaged.” (The Lanham Act covers U.S. trademark law and forbids false advertising.)

Furthermore, the Board says, it “requested – and the court approved – a confidentiality order that provides special procedures for handling such confidential or sensitive information (including procedures for filing documents with the court confidentially).  CFP Board designated some of its documents as confidential under this order and we expect that the Camardas will do the same with their confidential documents.”

Brian Hamburger, founder of the New Jersey-based Hamburger Law Firm and its affiliate MarketCounsel, which offers RIA compliance services, told ThinkAdvisor in a previous interview that while the CFP Board’s request for the Camardas’ client lists is “quite common in litigation,” granting the request “could empower the CFP Board to routinely make requests in similar cases and in more informal inquiries.”

“By seeking this [client] information under court order, the CFP Board falls within the exception to [the SEC’s] Regulation S-P, which permits financial advisors to share the information pursuant to a legal requirement.”

However, Hamburger added that the CFP Board “routinely makes such broad requests from its designees in more informal proceedings,” and that his firm has “long taken the position that these requests are impermissible” under Reg S-P absent the client’s consent.

“Yet, the CFP Board does not warn advisors of this and often induces them into furnishing private information without the requisite client consent.”

Drummond said in his Sept. 2 statement that “the identity and location of the Camardas’ clients is highly relevant to the claims the Camardas have made, including (but not limited to) the relevant market for their antitrust claims, the Camardas’ contention that the CFP professionals on the Hearing Panel that heard their case are ‘competitors of plaintiffs,’ and the Camardas’ claim that they ‘have suffered, and will continue to suffer, injuries to their good reputation, good will, established business relationships, income, business designations and certifications, and future business relationships.’”

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