A U.S. federal judge on Monday granted the Certified Financial Planning Board’s bid to throw out a lawsuit filed by two Florida-based advisors, challenging the organization’s decision to sanction the two for their use of the “fee-only” description.
In an order filed in the District of Columbia federal court, Judge Richard J. Leon granted the CFP Board’s motion for summary judgment, dismissing the case filed by Jeff and Kim Camarda in its entirety. His explanation behind the decision remains under seal, but he indicated he will likely make the documents public after the parties have a chance to argue for what they want to remain redacted.
The CFP Board said Tuesday it was very pleased that the judge dismissed the case on the basis of deficient legal claims without the need for a trial. "This ruling affirms CFP Board's authority to set and enforce its Standards of Professional Conduct, which serve as critical consumer protections," a spokeswoman for the organization said in a statement.
A spokesman for the Camardas declined to comment.
The Camardas, who run Camarda Advisors and Camarda Consultants, filed their suit in June 2013, alleging the CFP Board failed to provide a fair and just hearing on 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 polices, 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 claiming the firm falsely advertised the “fee-only” distinction 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.
Last May, after months of legal wrangling, the Camardas’ won a minor victory when the CFP Board released 300,000 pages of documents. The Camardas first requested the documents in November 2013, and filed a motion to compel in March.
Following requests from both sides for extensions, the CFP Board filed its motion for summary judgment under seal in December. On Monday, Judge Leon granted that request.
Judge Leon did offer both parties a chance to argue for redactions to the opinion before it is made public, but added “redaction is disfavored and must be supported by a persuasive rationale.”