FPSC reports disciplinary actions

The Financial Planners Standards Council has released a list of disciplinary actions taken against financial planners in the first six months of 2006, in a move designed to ensure the integrity of the CFP designation.

“The public disclosure of disciplinary actions taken against individuals among our 17,000-strong CFP professional community is a natural progression for a relatively new certification body such as ours, and for the newly emerging financial planning profession,” says Cary List, acting president and CEO of the FPSC.

There were six instances of disciplinary action in the community during this period, with only one person having their right to use the CFP designation permanently revoked.

Robert Brick, of Woodstock, Ont., had his CFP revoked for breach of Rules 101 and 202 of the CFP Code of Ethics. Rule 101 bars CFPs from engaging in dishonest conduct, while Rule 202 states that “a CFP professional shall act in the interests of the client.”

Brick failed to file a client’s tax returns, while assuring the client that he had. In addition, he was found to have breached Rule 704, by failing to notify a client that he would no longer act on their behalf regarding a mortgage transaction.

Another five planners received official admonishments, but retained the right to use the CFP mark.

Jason Cloth, of Richmond Hill, Ont., received a letter of dmonishment for breaching Rule 607, after he failed to report a lawsuit made against him in four separate licence renewal periods.

Ludwik Klimkowski, of Ottawa, was admonished after being found in breach of Rules 606(b) and 607, which relate to accepting access information for a client’s online trading account and performing trades for them. He also constructed an aggressive investment portfolio that could not be reconciled with the KYC file, constituting a breach of Rule 702.

Iris McKay, of Winnipeg, admitted to breaching Rule 702, which allows the planner to make and/or implement only those recommendations that are suitable for the client. She implemented a leverage strategy for a client for whom it was not suitable. McKay also breached Rule 303 by intervening in a client’s personal affairs and making debt payments for the client.

Andrew Stokman, of London, Ont., admitted to breaching Rule 201 by not conducting proper due diligence on an investment before recommending it to clients. The investment turned out to be fraudulent. He was found to have acted “beyond the authority of his dealer relationship and contrary to applicable laws, rules and regulations,” resulting in a breach of Rule 607 as well.

Finally, Serguei Totrov, of Toronto, was found to have breached Rules 201, 202 and 702 by placing substantially all of his clients’ retirement savings into a speculative investment, without taking sufficient care in selecting the investment.

The FPSC implemented the policy of publicly reporting all disciplinary actions effective January 1, 2006.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

(10/17/06)