Tip of the Iceberg? How the Camarda Lawsuit Challenges the Profession

In a Sep. 29 release date, the Camardas, through Donald Hannaford of Hadron Media Group, described their suit this way: "We requested leave of Court to amend our complaint in the lawsuit to allege claims against the Board for breach of contract, unfair competition, and violations of the antitrust statute based upon what we believe are the Board's inappropriate and unjustified threats to sanction stemming from unwarranted accusations of misconduct against us."

Strong stuff.  The complaint itself contains equally strong language and allegations. However, despite all the legal bluster, the Camardas' arguments in defense of their use of the "fee-only" description remains conspicuously thin. In a revealing section of their complaint, they contend: "…every current or prospective client of Camarda [Wealth Advisors] and/or Camarda Consultants [the brokerage agency] receives a written disclosure statement regarding the services provided by each separate entity and the compensation each entity might receive for its services. All prospective clients of Camarda Advisors and/or Camarda Consultants have been required to sign this statement."

Maybe I'm missing something here, but this section appears to make it unavoidably clear that the RIA and the insurance agency were sharing clients. In another section, they maintain that the two firms "didn't share revenues." As if that mattered. There is no denial that the couple owns both companies, and sit on the boards of both.

It's also telling that the Board's own restriction against "fee-only" advisors affiliating or owning interests on commission-charging "related parties," isn't mentioned in their complaint except in a confusing reference to a CFP Board "pronouncement that its 'fee-only' definition specifically excluded 'related parties.'"

With all that said, the CFP Board is right to take this lawsuit seriously. Courts have made favorable rulings on even flimsier evidence. Should the court find against the Board in this case, the consequences for the Board and for the advisory profession could be dramatic. In a final, ironic note, the Camardas' complaint also reveals that following notice of the Board's investigation, the Camardas "revised Camarda Advisors' website to remove all reference to 'fee-only,'" and also revised their ADV accordingly. It was only after "The CFP Board indicated its intentions to publish the Public Letter [of sanction] on the Internet and in local newspapers…" anyway, that the Camardas filed their suit.

I know; I won't say it. Let's just hope the Board hasn't overplayed its hand.