Florida-based financial advisors Jeff and Kim Camarda are appealing a D.C. judge’s recent decision to toss their case against the CFP Board, saying they feel there is substantial legal merit to their lawsuit.
The couple is now seeking a review of their case by the U.S. Court of Appeals for the District of Columbia Circuit, following Judge Richard J. Leon’s ruling last month that awarded the CFP Board summary judgment and dismissed the Camardas' lawsuit.
“We believe there are grave wrongs to be righted here, with the welfare of the profession, and of the client public, hanging in the balance,” the Camardas said in a statement Thursday.
In an opinion unsealed last week that explained the reasoning for his decision, Leon determined there was no breach of contract, noting the advisors had failed to show the organization was motivated by “bad faith or ill will” in its discipline procedures.
He added the CFP Board “followed its own rules throughout the disciplinary proceedings against the plaintiffs [the Camardas],” according to the court documents.
CFP Board said in a statement Thursday that it stands behind Leon’s determination. "We believe that the judge’s decision will stand and that an appeals court will agree with Judge Leon."
The Camardas, who run Camarda Advisors and Camarda Consultants, filed the lawsuit two years ago, claiming the CFP Board failed to provide a fair and just hearing before sanctioning them for their use of the term “fee-only” to describe their compensation model to clients.
The advisors claimed the organization’s disciplinary action and subsequent procedures violated the Board’s disciplinary guidance and policies, and damaged the Camardas’ reputation and competitive ability to run their businesses. The advisors alleged this is in violation of antitrust laws such as the Sherman Act and the Latham Act.
According to the amended complaint filed in January 2014, the CFP Board started to investigate the Camardas after receiving an anonymous complaint that the firm falsely advertised themselves as “fee-only” in connection with investment advice when they also provided commission-based services.
The Board’s investigation found probable cause, and the matter was referred to a disciplinary hearing in March 2012. But the Camardas claim they were not given a fair hearing, alleging the Board failed to properly conduct due diligence or speak with the firm’s clients to see if they were misled regarding their fee arrangements. Further, the Board failed to show any proof of a revenue-sharing arrangement between Camarda Advisors and Camarda Consultants.
The Camardas’ suit sought at least $75,000 in damages and attorneys’ fees, as well as an order rescinding the Board’s decision and voiding the corresponding disciplinary sanction.