ERROLD F. MOODY JR.
June 6, 2005
Ms. Sarah Ball Teslik
CEO
CFP Board of Standards
1670 Broadway, Suite 600
Denver, CO 80202-4809
RE: Constance P. Smith and Cynthia M. Smith, individually and on behalf of various family trusts v. The Johnson Financial Group, Inc., Asset Management Securities Corp., James Albert Johnson, Jr. and James Michael Johnson (Johnson) NASD Case No. 03-02522; and
Release of material by the Smith's
Dear Ms. Teslik,
The Smith's informed me that the Board had reopened the case against the Johnson's since they had received a request for a release of material from the firm of A, L and S. Be advised, that the Smith's do not do anything without my direction. I told them to go ahead and sign. That the Board does not wish to advise me of the current status is its prerogative- it just seems foolish. So be it.
But there are problems within the request. First, all the material is not in the hands of the attorney. Prior to the arbitration date, I was preparing a separate report for arbitration detailing the misuse of a variable life policy inside an ILIT along with other critical statements. I could not/did not complete this report because I was unable to get the subpoenaed material from the Board and therefore it was not submitted to the attorneys. This report will be needed for the Board's review. It does contain a partial rehash of the letters you have had to date regarding the inability to get documents- but the other material is valid and required for a competent analysis of the situation.
There are additional issues. I demand that any CFP's in any fashion who review this material- within the Board of Inquiry or otherwise- are legal. While the Board does not consider legality a material issue in the activity of CFP's that are in practice, it is absolutely mandatory that all entities for this scenario are beyond reproach. I do not wish to consider additional legal action against the Board- but it would possibly be forthcoming if those attempting critique of Johnson were not licensed. The point is this- literally all the practicing CFP's involved with the Board (or anyplace for that matter) charge a fee for a financial plan. And a financial plan must include insurance- the crux of the complaint against Johnson. (The element of CFP insurance knowledge is contained in the separate report addressed above.) That said, at least an insurance license is required in order to analyze past and current types of policies and practices. But, in California, anyone even offering (never mind doing) comprehensive financial planning advice for a fee must also be a Life and Disability Insurance Analyst since such advice has to include the insurance element. Because I am the only California CFP who has ever passed the exam, I do not want illegal planners offering analysis or criticism one way or the other on the validity of Johnson's insurance advice. Beyond California, there are about 35+ other states also requiring proper licensing. No one who does not possess the appropriate and mandatory licenses are to be allowed to hold forth any commentary on this complaint. And so I am clear, the review must not only consider the amount of insurance against the value of the assets/estate, but also address the issue of utilizing a variable life policy inside a irrevocable life insurance trust for the Smith's. It is unconscionable, illogical and just plain stupid to allow non licensed and, almost assuredly, illegal CFPs to offer testimony and analysis.
Lastly- and an issue that I did not address last time since I wanted to see what happened- is the fact that apparently the Board cannot count. The point being is that Brock referred to 800 pages of material that was sent to the Inquiry Panel (and infers that was what was sent by Johnson/Montgomery). Since I am in receipt of the two boxes from the Board, I estimate there are easily over 5,000 pages of material that had to be reviewed. I hate to tell anyone, but being off by thousands of pages simply does not imply that anyone ever looked at the material to begin with- certainly including the attorneys that dealt with the original review. If only 800 pages went to the Inquiry Board, why not the rest? Who picked what pages? On what basis? Did those entities grasp the significance of the issues? Were they versed in insurance? Did they know a plan was required? If the Board is using non licensed entities- even non CFPs- to selectively (randomly?) pick 800 pages out of 5,000+, on what basis did they perceive they could select just the "right" 800 pages that are worthy of note to review? It appears seems a grave injustice to the complainant if this actually be the case.
My report for the Smith's and on which the entire case and proposed settlement was based (which I assume you will receive in full from A, L and S) took an extremely long time to complete. It was not only all these pages, but calls and research to past and present insurers, accountants and more. I expect the same level of intensity and competency on the part of the Inquiry panel.
For the record, I am not paid by the Smith's for any of this work. It is a completely voluntary effort to correct a tremendous injustice not only to them but to the those that believe that honesty, integrity and knowledge are paramount to professional services. I am very aware that (most?) Board members have found this and previous details of ineptness to be unprofessional or the like. I don't care. I have found that the lies and deception that have permeated Board members and CFPs alike are practices that have no place in this business of intense personal trust.
Very Truly,
Errold F. Moody Jr.
PS: When will the Smith's be paid? Do you need a copy of my bill?