CFP Board Suspends Broker Accused of Violating Reg BI with Improper GWG Bond Sales
The Certified Financial Planner Board of Standards Inc. has imposed an interim suspension against a certified financial planner and broker at Western International Securities.
The Certified Financial Planner Board of Standards Inc. has imposed an interim suspension against Patrick Egan, a certified financial planner and broker at Western International Securities, who was recently charged by the Securities and Exchange Commission for violating Regulation Best Interest.
On June 17th, the SEC charged Western International Securities and five of its registered representatives, including Egan, with violating Regulation BI when they recommended and sold GWG’s L Bonds to retirees and other retail investors. GWG Holdings filed for Chapter 11 bankruptcy in April 2022.
The SEC claims that Western and the brokers recommended the bonds to retail customers, many of whom were on fixed incomes and had moderate risk tolerances, despite GWG stating in its prospectus that the L bonds were high risk, illiquid, and only suitable for customers with substantial financial resources.
The SEC alleges that Egan and other co-defendants violated Reg BI’s “care obligation” both because they did not exercise reasonable diligence, care, and skill to understand the risks, rewards, and costs associated with L Bonds, and also because they recommended L Bonds to customers without a reasonable basis to believe the bonds were in their customers’ best interests. The SEC’s lawsuit is pending.
After learning about the SEC’s lawsuit, the CFP Board suspended Egan’s right to use the CFP certification marks, pending their investigation and possible further disciplinary proceedings.
An interim suspension order is a temporary sanction and does not preclude the CFP Board from imposing a final sanction and will remain in place until the Disciplinary and Ethics Commission issues a final order or, if an appeal is filed, until CFP Board’s Appeals Commission issues a final order.
The CFP Board may vacate an interim suspension if the underlying professional discipline is vacated or reversed, or if sufficient evidence is provided indicating that a financial planner was not the subject of professional discipline.
Certified Financial Planner Board of Standards is the professional body for personal financial planners in the U.S., sets standards for financial planning, and administers the CFP certification.
