Creative Planning, one of the largest registered investment advisories in the country, run with over $36 billion in client assets, has settled with the Securities and Exchange Commission over charges related to client testimonials. Peter Mallouk, a prominent advisor and the firm’s president, was also charged for violations of the RIA’s code of ethics.
According to the SEC, Creative Planning purchased radio spots to advertise the firm’s services on a local Kansas City station about 3 years ago. The advertisements ran from August 2015 to October 2017. During that period, one of the radio hosts became a client of the firm, and started touting its services, talking about his good relationship with Creative Planning, even calling out his wealth manager by name. The firm failed to notify the radio station and the host that they could not air testimonials. And in March 2017, the radio station created a new radio spot, with input from the firm, according to the SEC. The radio spot included the radio host's testimonial.
The firm also failed to monitor and maintain copies of the live spots, as its written policies required.
Also, Mallouk was charged for not reporting securities transactions in three brokerage accounts for his family members. The firm’s code of ethics requires executives to “report trades implemented for a personal account, an account of any household family member.” This must be submitted to the firm’s chief compliance officer, which Mallouk did not.
Mallouk did not return a call seeking comment.
Creative Planning was founded over 30 years ago and is headquartered in Overland Park, Kan. Mallouk has grown the firm from under $100 million to over $36 billion in assets in just 15 years, without relying on mergers and acquisitions. He built it through organic growth and a series of strategic partnerships. The firm has long been ranked on the top lists of RIAs.
The firm and Mallouk consented to a cease-and-desist order, and a civil penalty.