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Regulation and Compliance > Federal Regulation > FINRA

CFP Board Disciplinary Roundup: 2015

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The Certified Financial Planner Board of Standards disciplined several CFP professionals for varying levels of unprofessional conduct.

CFP Board sanctions include letters of admonition, interim suspensions and permanent revocations of a violator’s CFP mark. Advisors may have also been sanctioned by the Financial Industry Regulatory Authority or state regulators.

Here are some highlights from the board’s most recent disciplinary action report, released in late December. In total, it reported 11 public sanctions, issued between May and October.

CFP Board Admonishes Professional Over Bankruptcy

Richard Connell, of Hingham, Massachusetts, received a public letter of admonition in June from the CFP Board’s disciplinary and ethics commission for failing to amend his Form U4 in a timely manner to disclose his Chapter 7 filing for bankruptcy in 2009.

Connell had settled with the Financial Industry Regulatory Authority over the matter, and in his settlement had agreed to a one-month suspension from association with any FINRA member in any capacity and $5,000 fine.

CFP Board Issues Interim Suspension for Financial Misconduct

Michael John Smeriglio III, of Greenwich, Connecticut, received an interim suspension of his CFP certification, effective May 28, 2015, after the CFP Board discovered that he accepted censure and a fine from FINRA, without admitting or denying its findings that he failed to provide the latter agency with information it requested. FINRA was investigating allegations that Smeriglio converted customer funds from a customer’s estate and trust.

FINRA permanently barred Smeriglio from associating with any FINRA member in any capacity. Under the CFP Board’s interim suspension order, Smeriglio’s CFP certification is suspended pending a completed investigation and possible further disciplinary proceedings.

California CFP Suspended for 5 Years After FINRA Bar

David Gabai, of West Hills, California, was suspended by the CFP Board’s disciplinary and ethics commission for five years, effective Aug. 30, 2015, after FINRA permanently barred him from association with any FINRA member in any capacity for deceptive, fraudulent and manipulative devices and schemes involving the purchase and sale of a stock.

Gabai also failed to advise the CFP Board of the FINRA suspension in writing within 30 days. Minnesota CFP Gets One-Year Suspension on Alternatives

David Hitchcock, of Spring Lake Park, Minnesota, was suspended for one year, effective Oct. 20, 2015. In his settlement with the disciplinary and ethics commission, Hitchcock consented to the CFP Board’s findings that he misrepresented an alternative investment as a low-risk investment to two clients.

The CFP Board also found that he failed to exercise reasonable and prudent professional judgment and act in the clients’ interest when he recommended and sold an alternative investment to two clients who had a low risk tolerance and which resulted in an unsuitable concentration of the clients’ net worth in one product. In addition, Hitchcock failed, as a financial planning practitioner, to recommend the alternative investment in such a way that his clients could make an informed decision.

CFP Board Suspends Texas Advisor for 4 Years

Richard Blair, of Bee Cave, Texas, was suspended by the CFP Board for four years, effective Aug. 23, 2015, after its disciplinary and ethics commission found that he had been sanctioned by the Texas State Securities Board (TSSB) for choosing to sell his clients shares of a real estate investment trust (REIT) at a higher share price that paid a commission when he could have sold the clients the same REIT at a lower share price that did not pay a commission.

At the same time, he charged some of the clients a management fee on the REIT shares in addition to a commission he received from the sale.

While Blair was ordered by the TSSB to reimburse clients who paid a commission and a management fee, he failed to make timely payments to do so. In addition, he failed to report to FINRA in a timely manner on securities-related civil litigation that was settled, and on multiple customer complaints.

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