CFP Board Imposes Public Discipline

Certified Financial Planner Board of Standards, Inc. (CFP Board) announced today public disciplinary actions against the following individuals, effective immediately or on the date noted in each case. Public disciplinary actions taken by CFP Board, in order of increasing severity, include letters of admonition, suspensions and permanent revocations.
This release contains information about disciplinary actions relating to 15 current or former CFP® professionals. Of these actions, there was one letter of admonition, one suspension, and 13 administrative revocations.

The basis for each decision can be found in a Disciplinary Action Report below and on CFP Board’s website. The public may check on an individual’s disciplinary history and certification status with CFP Board at www.CFP.net/verify.

CFP Board’s enforcement process is a critical consumer protection. CFP® professionals agree to abide by CFP Board’s Standards of Professional Conduct (Standards), which includes the Code of Ethics and Professional Responsibility, Rules of Conduct and Financial Planning Practice Standards.  CFP Board enforces its ethical standards by investigating incidents of alleged violations and, where there is probable cause to believe there are grounds for discipline, presenting a Complaint containing the alleged violations to the CFP Board’s Disciplinary and Ethics Commission (Commission) pursuant to CFP Board’s Disciplinary Rules and Procedures (Disciplinary Rules).  If the Commission determines there are grounds for discipline, it may impose a sanction ranging from a private censure or public letter of admonition to the suspension or revocation of the right to use the CFP® marks.  CFP Board’s Disciplinary Rules set forth the process for investigating matters and imposing discipline where violations have been found.

The Commission meets at least three times a year to provide a fair, unbiased review of any matter in which a CFP® professional is alleged to have committed violations of the Standards.

The Commission functions in accordance with the Disciplinary Rules and reviews all matters on a case-by-case basis, taking into account the details specific to an individual case. While CFP Board has attempted to capture the details relevant to each decision, the summary nature of these releases may omit certain details affecting the decision. Accordingly, the decisions and/or rationale described in the releases may not apply to other cases reviewed by the Commission or reflect the Commission’s future interpretation or application of the Standards.

LETTER OF ADMONITION

TENNESSEE

Peggy Jo Rouillier, CFP® (Nashville): In August 2018, CFP Board’s Disciplinary and Ethics Commission (Commission) and Ms. Rouillier entered into a settlement agreement in which Ms. Rouillier agreed that CFP Board would issue a Letter of Admonition.  In the settlement agreement, Ms. Rouillier consented to CFP Board’s findings that, in November 2015, she signed three customers’ names on forms and then submitted the forms to the customers’ annuity carrier for processing.  CFP Board further found that Ms. Rouillier’s firm terminated her in 2016 with respect to this conduct and that, in a 2016 Cautionary Action Letter, the Financial Industry Regulatory Authority, Inc. (FINRA) determined that Ms. Rouillier’s conduct violated FINRA Rules 2010 and 4511(a).  CFP Board determined that Ms. Rouillier’s conduct violated Rules 4.3 and 5.1 of CFP Board’s Rules of Conduct, providing grounds for discipline pursuant to Article 3(A) of CFP Board’s Disciplinary Rules and Procedures.  Accordingly, the Commission admonished Ms. Rouillier with regard to the above-mentioned conduct. 

SUSPENSION

MASSACHUSETTS

Brian K. Case (Longmeadow): In August 2018, CFP Board’s Disciplinary and Ethics Commission (Commission) and Mr. Case entered into a settlement agreement in which Mr. Case agreed that CFP Board would issue a Suspension of his right to use the CFP® certification marks for three months.  In the settlement agreement, Mr. Case consented to CFP Board’s findings that he failed to place the interests of his clients ahead of his own and communicated false or misleading information to his clients when he (1) provided false financial statements to investors that reflected inflated values for investments held in two private funds that his firms advised, and (2) included the inflated valuations in his firms’ Forms ADV.  Mr. Case also consented to CFP Board’s findings that he failed to comply with applicable regulatory requirements governing professional services provided to clients and failed to exercise reasonable and prudent professional judgment in providing professional services to clients when he: (1) relied on the private fund adviser exemption from registration, although he was not entitled to and did not otherwise qualify for an exemption from registration with the Securities and Exchange Commission (SEC); (2) included inflated asset valuations in his firms’ Forms ADV; (3) failed to have his firms submit to surprise examinations as required by the SEC’s Custody Rule; (4) failed to have his firms comply with the SEC’s Compliance Rule; (5) improperly used fund assets to pay legal fees; (6) contracted to earn a performance fee for managing a fund without determining whether the fund’s investors were qualified clients; and (7) aided and abetted and caused his firms’ violations of the Investment Advisers Act of 1940 (Advisers Act).  CFP Board further found that, in July 2017, the SEC issued a Cease and Desist Order in which the SEC determined that Mr. Case willfully aided and abetted his firms’ violations of various sections of the Advisers Act, including Section 203(a), Section 206(4) and rules promulgated thereunder, and Section 205(a)(1), and himself willfully violated Sections 206(2) and 207 of the Advisers Act.  The SEC ordered that Mr. Case cease and desist from committing or causing any violations of the above-referenced statutes and rules and, jointly and severally with other defendants, pay a $150,000 civil penalty.  The SEC’s order also stated that Mr. Case and his firms had agreed to certify compliance with various undertakings.  CFP Board found that Mr. Case failed to disclose this professional discipline in writing to CFP Board within 30 days.  CFP Board determined that Mr. Case’s conduct violated Rules 1.4, 2.1, 4.3, and 4.4 of CFP Board’s Rules of Conduct and Article 13.2 of CFP Board’s Disciplinary Rules and Procedures (Disciplinary Rules), and provided grounds for discipline pursuant to Articles 3(A) and 3(D) of CFP Board’s Disciplinary Rules.  Accordingly, the Commission suspended Mr. Case with regard to the above-mentioned conduct.  Mr. Case’s suspension is effective from August 7, 2018 until November 7, 2018.

ADMINISTRATIVE REVOCATION

CALIFORNIA

Charles Henry Frieda (Anaheim): In June 2018, CFP Board issued an order permanently revoking Mr. Frieda’s right to use the CFP® certification marks.  This discipline followed Mr. Frieda’s failure to file an answer to CFP Board’s Complaint within the required timeframe.  CFP Board’s Complaint alleged, among other things, that Mr. Frieda: (1) made unsuitable investment recommendations to more than 50 clients that over-concentrated the clients’ assets in energy-sector securities, some of which were speculative, resulting in significant losses to the clients; (2) failed to place the interests of his clients ahead of his own and failed to comply with applicable regulatory requirements with respect to the unsuitable investment, including Financial Industry Regulatory Authority (FINRA) Rules 2111 and 2010, resulting in a FINRA bar in 2017; (3) failed to respond to requests from CFP Board, thereby failing to fully cooperate with CFP Board’s investigation; and (4) failed to report his FINRA bar in writing to CFP Board within 30 days.  CFP Board’s Complaint alleged that Mr. Frieda’s conduct violated Rules 1.4, 4.3, 4.5, and 6.1 of CFP Board’s Rules of Conduct and Article 13.2 of the Disciplinary Rules and Procedures (Disciplinary Rules), providing grounds for discipline under Articles 3(A), 3(D), 3(E) and 3(F) of CFP Board’s Disciplinary Rules. Mr. Frieda declined to file an Answer to CFP Board’s Complaint within 20 calendar days of the date of service, as required by Article 7.3 of the Disciplinary Rules.  In accordance with Article 7.4 of the Disciplinary Rules, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation.  Mr. Frieda’s revocation was effective as of July 30, 2018.

LOUISIANA

Walter A. Morales (Baton Rouge): In June 2018, CFP Board issued an order permanently revoking Mr. Morales’ right to use the CFP® certification marks.  This discipline followed Mr. Morales’ failure to file an answer to CFP Board’s Complaint within the required timeframe.  CFP Board’s Complaint alleged, among other things, that Mr. Morales: (1) made material misrepresentations to his clients regarding the valuation of certain collateralized debt obligation (“CDO”) notes and created false internal valuation documents; (2) received compensation that was neither fair nor reasonable as a result of the misrepresented valuations; (3) failed to make and/or implement only recommendations which are suitable for the clients when he invested his client’s conservative, fixed income portfolios into high risk RMBS; (4) engaged in conduct that reflects adversely on his integrity or fitness as a certificant, upon the CFP® marks, or upon the profession with respect to a $55 million civil settlement and a 2017 bar and fine from the Securities and Exchange Commission (SEC) relating to his conduct; (5) failed to report his SEC bar to CFP Board in writing within 30 days after receiving notification of the bar; and (6) failed to respond to CFP Board’s requests for information related to his SEC bar and his civil suit settlement, thereby obstructing CFP Board staff and the Commission in the performance of their duties.  CFP Board’s Complaint alleged that Mr. Morales’ conduct violated Rules 102, 201, 202, 401(a), 405, 606(a), 607, and 703 of CFP Board’s Code of Ethics, Rule 6.5 of the Rules of Conduct, and Article 13.2 of the Disciplinary Rules and Procedures (Disciplinary Rules), providing grounds for discipline under Articles 3(A), 3(D), 3(E) and 3(F) of CFP Board’s Disciplinary Rules.  Mr. Morales declined to file an Answer to CFP Board’s Complaint within 20 calendar days of the date of service, as required by Article 7.3 of the Disciplinary Rules.  In accordance with Article 7.4 of the Disciplinary Rules, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation.  Mr. Morales’ revocation was effective as of July 30, 2018.

MASSACHUSETTS

Michael K. Young (Marlborough): In June 2018, CFP Board issued an order permanently revoking Mr. Young’s right to use the CFP® certification marks.  This discipline followed Mr. Young’s failure to file an answer to CFP Board’s Complaint within the required timeframe.  CFP Board’s Complaint alleged, among other things, that Mr. Young: 1) filed two personal bankruptcies in 2003 and 2017; 2) falsely stated on his Ethics Disclosures that he had no prior bankruptcies; and 3) failed to respond to CFP Board’s Notices of Investigation and requests for documents and information.  CFP Board’s Complaint alleged that Mr. Young’s conduct violated Rules 6.1, 6.3, and 6.5 of the Rules of Conduct and Article 3(F) of the Disciplinary Rules and Procedures (Disciplinary Rules), providing grounds for discipline under Articles 3(A), 3(F), and 3(G) of CFP Board’s Disciplinary Rules. Mr. Young declined to file an Answer to CFP Board’s Complaint within 20 calendar days of the date of service, as required by Article 7.3 of the Disciplinary Rules.  In accordance with Article 7.4 of the Disciplinary Rules, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation.  Mr. Young’s revocation was effective as of July 30, 2018.

MISSOURI

John Scott Elliott (Kansas City): In June 2018, CFP Board issued an order permanently revoking Mr. Elliott’s right to use the CFP® certification marks.  This discipline followed Mr. Elliott’s failure to file an answer to CFP Board’s Complaint within the required timeframe.  CFP Board’s Complaint alleged, among other things, that Mr. Elliott: (1) failed to comply with applicable regulatory requirements governing professional services provided to clients when he failed to respond to requests for information from the Financial Industry Regulatory Authority (“FINRA”) resulting in a FINRA suspension in 2016 and a bar in 2017; (2) failed to exercise reasonable and prudent professional judgment in providing professional services to clients and failed to perform professional services with dedication to the lawful objectives of his employer and in accordance with CFP Board’s Code of Ethics when he was terminated for violating his firm’s compliance policies related to selling away; (3) failed to report his 2017 FINRA bar to CFP Board in writing within 30 days; and (4) failed to respond to requests from CFP Board.  CFP Board’s Complaint alleged that Mr. Elliott’s conduct violated Rules 4.3, 4.4, 5.1, and 6.1 of CFP Board’s Rules of Conduct and Articles 3(F) and 13.2 of the Disciplinary Rules and Procedures (Disciplinary Rules), providing grounds for discipline under Articles 3(A), 3(D), 3(E), and 3(F) of CFP Board’s Disciplinary Rules. Mr. Elliott declined to file an Answer to CFP Board’s Complaint within 20 calendar days of the date of service, as required by Article 7.3 of the Disciplinary Rules.  In accordance with Article 7.4 of the Disciplinary Rules, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation.  Mr. Elliott’s revocation was effective as of July 30, 2018.

NEW JERSEY

Timothy J. McGee (Ocean City):  In July 2018, CFP Board issued an order permanently revoking Mr. McGee’s right to use the CFP® certification marks.  This discipline followed Mr. McGee’s failure to pay hearing costs assessed by CFP Board within the required timeframe.  CFP Board’s Complaint alleged that Mr. McGee: (1) was convicted for federal criminal insider trading and perjury in 2012; (2) consented to a civil judgment in 2015 with respect to his unlawful insider trading, which permanently enjoined him from violating Section 10(b) of the Securities Exchange Act of 1940 and Rule 10b-5 thereunder and ordered him to pay over $360,000 in disgorgement gains and prejudgment interest; and (3) was barred by the Securities and Exchange Commission (SEC) in 2015 from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent and was barred by the SEC from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.  CFP Board’s Complaint also alleged that Mr. McGee: (1) engaged in conduct involving dishonesty, fraud, deceit or misrepresentation; (2) knowingly made false statements to the SEC; (3) failed to perform services in accordance with applicable laws, rules and regulations of governmental agencies and other applicable authorities; and (4) engaged in conduct which reflects adversely on his integrity or fitness as a CFP Board designee, upon the marks, or upon the profession.  In addition, CFP Board’s Complaint alleged that Mr. McGee’s conduct violated Code of Ethics Rules 102, 606(a), and 607, providing grounds for discipline under Articles 3(A), 3(C) and 3(D) of CFP Board’s Disciplinary Rules and Procedures (Disciplinary Rules).  Mr. McGee failed to pay hearing costs assessed by CFP Board, as required by Article 18.4 of the Disciplinary Rules.  In accordance with Article 7.4 of the Disciplinary Rules, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation.  Mr. McGee’s revocation was effective as of August 1, 2018.

OHIO

Douglas S. Miller (Toledo): In June 2018, CFP Board issued an order permanently revoking Mr. Miller’s right to use the CFP® certification marks.  This discipline followed Mr. Miller’s failure to file an answer to CFP Board’s Complaint within the required timeframe.  CFP Board’s Complaint alleged, among other things, that Mr. Miller: (1) engaged in conduct that caused him to be permanently barred in 2016 from associating in any capacity with any Financial Industry Regulatory Authority (FINRA) member firm, and caused his investment adviser representative registration to be revoked by the State of Michigan’s Department of Licensing and Regulatory Affairs; (2) violated FINRA rules and his employer’s policies and procedures by participating in outside business activities and private securities transactions without first providing written notice to his firm; (3) failed to disclose to his firm in writing the investments he made personally and on behalf of family members in six related limited liability companies; (4) failed to adequately disclose to clients and his firm that he was receiving “monitoring fees” from limited liability companies in which he was directing his clients to invest; (5) made false and misleading statements to CFP Board by filing an Ethics Questionnaire that falsely claimed that he had not been terminated by an employer or investigated by a regulator; and (6) failed to notify CFP Board in writing about his professional discipline within 30 days of learning that he had been sanctioned with a permanent bar from FINRA.  CFP Board’s Complaint alleged that Mr. Miller’s conduct violated Rules 4.3 and 5.1 of CFP Board’s Rules of Conduct and Article 13.2 of CFP Board’s Disciplinary Rules and Procedures (Disciplinary Rules), providing grounds for discipline under Articles 3(A), 3(F), and 3(G) of the Disciplinary Rules.  Mr. Miller declined to file an Answer to CFP Board’s Complaint within 20 calendar days of the date of service, as required by Article 7.3 of the Disciplinary Rules.  In accordance with Article 7.4 of the Disciplinary Rules, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation.  Mr. Miller’s revocation was effective as of July 30, 2018.

Michael J. Zembala (Beachwood): In July 2018, CFP Board issued an order permanently revoking Mr. Zembala’s right to use the CFP® certification marks.  This discipline followed Mr. Zembala’s failure to pay hearing costs assessed by CFP Board within the required timeframe.  CFP Board’s Complaint alleged, among other things, that Mr. Zembala: (1) failed to place the interests of his client ahead of his own, communicated misleading information to a client, failed to disclose and omitted facts to a client, and failed to treat his clients fairly and provide professional services with integrity and objectivity, when he arranged to have himself named as a co-owner and beneficiary of a client’s life insurance policy in 2010 without informing the client of these arrangements; (2) failed to disclose to his client a general summary of likely conflicts of interest between the client and himself when he failed to disclose that he was both the adviser and life insurance agent of record to the client and the purchaser, co-owner, and beneficiary of the insurance policy; (3) failed to comply with applicable regulatory requirements regarding outside business activities; and (4) failed to perform professional services with dedication to the lawful objectives of the employer and in accordance with CFP Board’s Code of Ethics when he violated his firm’s policies and procedures.  CFP Board’s Complaint alleged that Mr. Zembala’s conduct violated Rules 1.4, 2.1, 2.2B, 4.1, 4.3, and 5.1 of CFP Board’s Rules of Conduct, providing grounds for discipline under Article 3(A) of CFP Board’s Disciplinary Rules and Procedures (Disciplinary Rules).  Mr. Zembala failed to pay hearing costs assessed by CFP Board, as required by Article 18.4 of the Disciplinary Rules.  In accordance with Article 7.4 of the Disciplinary Rules, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation.  Mr. Zembala’s revocation was effective as of August 1, 2018.

PENNSYLVANIA

Thomas E. Omark (Erie): In June 2018, CFP Board issued an order permanently revoking Mr. Omark’s right to use the CFP® certification marks.  This discipline followed Mr. Omark’s failure to file an answer to CFP Board’s Complaint within the required timeframe.  CFP Board’s Complaint alleged, among other things, that Mr. Omark: (1) failed to comply with applicable regulatory requirements governing professional services to his clients when, between December 2013 and August 2015, he exercised unauthorized discretion in customer accounts, falsely marked customer order tickets as solicited, and solicited the purchase of company stock against his employer’s policy; (2) failed to perform professional services with dedication to the lawful objectives of his employer and in accordance with CFP Board’s Code of Ethics when he solicited the purchase of his employer’s stock; and 3) failed to report professional discipline to CFP Board in writing within 30 days after the date on which he was notified that he had been suspended by the Financial Industry Regulatory Authority (FINRA) in 2016.  CFP Board’s Complaint alleged that Mr. Omark’s conduct violated Rules 4.3 and 5.1 of CFP Board’s Rules of Conduct and Article 13.2 of CFP Board’s Disciplinary Rules and Procedures (Disciplinary Rules), providing grounds for discipline under Articles 3(A), 3(D), and 3(E) of the Disciplinary Rules.  Mr. Omark declined to file an Answer to CFP Board’s Complaint within 20 calendar days of the date of service, as required by Article 7.3 of the Disciplinary Rules.  In accordance with Article 7.4 of the Disciplinary Rules, the allegations set forth in the Complaint were deemed admitted, and CFP Board issued an Administrative Order of Revocation.  Mr. Omark’s revocation was effective as of July 30, 2018.

TEXAS

Mikeal A. Alligood (Fort Worth): In June 2018, CFP Board issued an order permanently revoking Mr. Alligood’s right to use the CFP® certification marks.  This discipline followed Mr. Alligood’s failure to file an answer to CFP Board&rsqu