The CFP Board is proposing revisions to its rules that involve the evaluation of applicants with expunged criminal convictions.
The board said it is requesting public comment on the plan, which would modify its Fitness Standards, Procedural Rules and Sanction Guidelines. The changes are intended to improve the process for evaluating the ethical fitness of CFP® certificants and candidates for CFP® certification when it comes to the issue of criminal expungement, according to the board.
“The credibility of CFP® certification rests on standards that are fair, transparent and consistently applied,” said CFP Board CEO K. Dane Snowden. “These proposals recognize individual circumstances without lowering the ethical bar that gives the certification its meaning, and stakeholder input is essential to getting that balance right.”
The CFP Board said the question of how to handle expunged criminal convictions when upholding the Ethics standard for CFP® certification does not frequently arise. In March, the board formed the Criminal Expungement Commission and gave it the task of recommending a new standard for this circumstance. The Commission met five times in April and May to consider the matter.
“Building on the Commission’s work, CFP Board proposes to modify the Sanction Guidelines, Fitness Standards and Procedural Rules to treat the expungement of a criminal conviction as a mitigating factor,” the CFP Board stated. “A “criminal expungement” refers to any legal process that removes the official record of a criminal conviction from public access. This proposal is unrelated to the expungement of customer complaints or civil dispute information from BrokerCheck.”
Currently, those applying for CFP® certification must report prior convictions for a Felony or Relevant Misdemeanor. Depending on the nature of the conviction, the applicant may be required to petition the Disciplinary and Ethics Commission (DEC) to determine their ethical fitness.
Under the new proposal, expungement of a criminal conviction would be recognized as a potential mitigating factor in the application. This means the DEC would determine whether mitigation is warranted based on the facts and circumstances. In deciding whether to mitigate, the DEC would weigh an expungement more heavily if the criminal conviction was expunged because the state court made positive findings about the applicant’s rehabilitation, good moral character or low risk of recidivism.
The applicant would continue to have the burden of establishing ethical fitness for CFP® certification, regardless of expungement. The DEC would not be required to mitigate in any particular case. This means the DEC could grant the Petition for Fitness (which means the applicant will be allowed to become a CFP® professional), grant it with a Public Notice or deny it with a Temporary or Permanent Bar (which means the applicant will not be allowed to become a CFP® professional).
If the DEC grants the Petition for Fitness of an applicant with an expunged criminal conviction, the DEC would apply the Fitness Standards to determine whether a Public Notice was necessary. CFP Board proposes to treat applicants with expunged criminal convictions that warrant public notice the same as other individuals whose conduct warrants public notice: CFP Board would publicize the decision and require the CFP® professional to disclose the outcome to clients.
Under the proposal, an applicant with an expunged Felony conviction that presents an absolute bar to file a Fitness Petition would be allowed to ask for the absolute bar to be mitigated. In that circumstance, the applicant may (or may not) be found ethically fit for certification. An applicant whose Felony conviction was not expunged would not have the opportunity to file the Fitness Petition and would be barred from certification.
The CFP Board is seeking input on the proposed changes from various stakeholders, including practitioners, candidates, firms, membership organizations and the public. The deadline to submit comments is August 21.
Hyman Cotter PC represents advisors, brokers and other financial professional in all matters involving the CFP Board, including CFP Board investigations. Headquartered in Chicago, our securities attorneys represent clients nationwide. For more information relating to CFP Board investigations and discipline or other matters, contact Hyman Cotter at (833) 665-0784 or through our online contact form for a free consultation
