CFP JUSTICE Flashcards
CFP req and regulations but more internal focused
Rule of thumb for CFP marks on LinkedIn and stuff
Should always be associated with a specific name or approved noun (e.g. professional)
Lifetime permanent bar from being a CFP (5 things)
- Theft, embezzlement, or other financial crimes
- Tax fraud or other tax crimes
- Any degree murder or rape
- Revocation of financial professional license (unless admin related)
- Felony conviction of any violent crime in the last 5 years.
An individual is presumptively barred from CFP if… (5 things)
- Revocation/suspension of NON-financial professional license (unless admin related)
- 2+ personal or business bankruptcies
- Suspension of Financial professional license (unless admin related)
- Felony conviction of violent crimes (not murder/rape) more than 5 years ago
- Felony conviction of non-violent crimes within 5 years
A CFP must notify the board in writing if the CFP has… (4 things)
- Declared bankruptcy
- A tax lien placed on CFP property
- Been charged, investigated, or named in virtually ANY official proceeding
- Been mentioned adversely in a civil action (including arbitration) or criminal action
List the 6 Codes of Ethics
- Act with honesty, integrity, competence, and diligence
- Act in **client’s best interest
- Exercise due care
- Avoid or disclose and manage conflicts of interest
- Maintain the confidentiality and protect the privacy of client information
- Act in a manner that reflects positively on the financial planning profession and CFP certification
List the 6 CFP Standards of Conduct that flow from 6 Codes of Ethics
- Fiduciary Duty
- Financial Planning and Application of the Practice Standards for the Financial Planning Process
- Practice Standards for the Financial Planning Process
- Duties owed to firms and subordinates
- Duties owed to CFP Board
- Prohibition on Circumvention
CFP Fitness Standards Sequential 3 Step Approach
- Conduct deemed unacceptable
- Conduct presumptively deemed unacceptable
- Appeals Process
If providing Financial Advice a CFP must disclose answers to these questions no matter what… (4 things)
-What products and services will be provided?
-How much will this cost in total?
-How are you, your firm, affiliates, and other parties compensated?
-Have you been publicly sanctioned or have you declared bankruptcy?
True or False
A CFP is responsible for the correct implementation of Financial Advice even if not selling financial products
TRUE
Terms of Engagement need to be provided to a client only if…
Financial Planning is provided
How must the privacy policy be explained to the client?
In writing at least
What is a Regulatory Action in the eyes of the CFP board?
An action initiated by
-fed gov agency
-state gov agency
-local gov agency
-foreign gov agency
-self-regulatory org
-other regulatory authority
What is a Regulatory Investigation in the eyes of the CFP Board? And what is it not?
Investigation initiated by
-fed gov agency,
-state gov agency,
-local gov agency,
-foreign government agency,
-self-regulatory organization,
-other regulatory authority.
Doesn’t include:
-preliminary/routine inquiries
-request for info
-blue sheet requests
-deficiency letters
-trading questionnaires
-etc
What is a Minor Rule in the eyes of the CFP Board?
A violation of an SEC or self regulatory organization’s minor rule violation
(sanction = $2500 or less and CFP doesn’t contest)
What is a Felony in the eyes of the CFP Board?
Any crime (even a misdemeanor) that is punishable with 1+ years of incarceration or a fine of +$1,000
What is a Relevant Misdemeanor in the eyes of the CFP Board?
Not a felony;
Criminal offense for conduct involving: fraud, theft misrepresentation, violence, or a second (or more) alcohol /drug related offense
What is a Civil Action in the eyes of the CFP Board?
Lawsuit or Arbitration
What is a Finding in the eyes of the CFP Board?
An adverse final action AND a consent decree
(consent decree = “I don’t plead guilty or not-guilty; no contest”)
What is a “Complainant?”
Person alleging misconduct
What is a “Client?”
Any person, business organization, or legal entity to whom a CFP provides or agrees to provide professional services pursuant to an engagement.
What is a “Related Party?”
Family member or Business entity (including a trust) whose receipt of sales-related compensation would benefit CFP
(Related parties can make fee only engagements fee based/commission and fee)
What is “Control?”
Power, directly/indirectly, to direct the management or policies of the entity at the relevant time, through ownership, by contract or otherwise
What is a “Control Person?”
Person who has control
What is an “Engagement?”
An oral/written agreement, arrangement, or understanding
What is “Family?”
Any family member that the CFP directly/indirectly supports financially.
(steps, in-laws, & domestic partners included)
How does a “Conflict of Interest” work? (2 main ways)
-CFP interests/firm’s interest are adverse to duties to client
-Duties to client A are adverse to client B
What is “Material?”
Information is material when a reasonable client or prospective client would consider the information important in making a decision
What is a “Respondent?”
An individual subject to CFP Board authority who must respond to a CFP Board proceeding
3 types of people subject to CFP Board authority?
CFP, candidate for CFP, and professionals eligible for re-instatement
7 Steps of the Disciplinary Process
- Request for investigation
- Investigation
- Request for documents and information
- Probable cause determination
- Hearing Panel
- Disciplinary and Ethics Commission
- Appeals committee
List the 4 possible sanctions of a CFP certificant and which ones could potentially be public
- Private Censure - private
- Public Censure - public
- Suspension - public
- Revocation - public
As a CFP you are not required to inform a client within 90 days that you’ve been ____ by the CFP Board
privately censured
What form should a Standard-E report take?
Narrative with no lying
When faced with the option of breaking your firm’s rules or CFP rules, which do you break?
Firm’s rules; CFP is the ultimate authority
These 7 things are grounds for discipline (sanction) by CFP Board
- Code violation
- Noncompliance w/ standards
- Criminal violations
- Professional discipline
- Disciplinary violation
- Failure to respond
- Lying to CFP Board
The Disciplinary and Ethics Commission is _____ in a hearing (compare to legal trial)
Judge
“Failure to Respond” is grounds for discipline (sanction).
What does “Failure to Respond” mean? (3 things)
-Failure to respond to a request by CFP
-Obstruction of DEC (or any panel thereof)
-Obstruction of CFP board staff
Key amount of days for Disciplinary process & exception
30 days;
Exception: respondent has 14 calendar days to respond to subsequent requests for documents.
True or False
Hearing Panel is 3 person panel that acts as jury in hearing
True; they decide if allegations are proven or unproven
True or False
CFP Board Counsel defends the Respondent in a hearing before the Hearing Panel
FALSE; they do investigation and prosecute respondent
If suspended for over 1 year, what is the latest and earliest the respondent can file petition for reinstatement?
Latest: No later than 5 years after 1st day of suspension
Earliest: As early as 6 months before suspension ends
If suspended for 1 year or less, what is the latest and earliest the respondent can file petition for reinstatement?
Latest: No later than 5 years after suspension begins
Earliest: As early as 30 days before suspension ends
The DEC responds to petitions with 1 of 3 determinations…
- Grant petition
- Deny petition but allow re-application
- Deny petition
True or False
If a potential certificant has committed an act considered a permenant bar, they can petition. It just probably will not work.
False; Only presumptive bars are eligble for petition
