Patrick Egan, a Western International Securities (WIS) certified financial planner (CFP), has been suspended by The Certified Financial Planner Board of Standards Inc., the professional body for personal financial planners in the U.S. the two key responsibilities of which are administering the CFP certification and setting standards for financial planning.
Action against Patric Egan
Table of Contents
It is an interim suspension for Egan, who was also one of the five registered representatives of WIS charged by the Securities and Exchange Commission (SEC) recently for a Regulation Best Interest violation, along with WIS.
Egan’s right to use the CFP certification marks was taken away by the CFP Board when they learned of the SEC suit. They will investigate the issue and other disciplinary actions could result.
The CFP Board is within its rights to impose the temporary sanction which shall remain in force till either their Disciplinary and Ethics Commission takes a final decision or, in the event of an appeal, a final order is issued by the Appeals Commission.
There can also be the vacation of an interim suspension on either of the following grounds:
- Reversal or vacation of the underlying professional discipline
- Exoneration of the financial planner from the subject of professional discipline on the strength of provision of adequate evidence to the effect
SEC charges
The SEC charge arose on account of WIS and these five representatives recommending and selling L Bonds of GWG Holdings to various retail investors, including retirees. It is now known that GWG filed for bankruptcy protection under Chapter 11 in April 2022.
SEC has contended that these sales were made by GIS and its representative to investors profiled as having a low or moderate risk tolerance, with many being on fixed incomes, despite the GWG prospectus specifying the L Bonds to be an illiquid and high-risk investment that should have been considered suitable only for customers with substantial financial resources and a high tolerance of risk.
The ’care obligation’ that was violated by the defendants according to the SEC was traced to their failure to exercise reasonable skill, care, and diligence and recommending the GWG L Bonds to customers without either making an effort to either understand the rewards and risks associated with the security or being convinced that the recommendation was in the best interest of the customers it was being given to.
The lawsuit of the SEC is pending.
