An Overland Park-based investment adviser has been fined $200,000 for a KMBZ radio show host’s enthusiastic on-air ads about the firm.
Creative Planning Inc. also consented to a cease and desist order and censure by the Securities and Exchange Commission in connection with the ads.
The spots violated a ban against testimonials in ads for registered investment advisers.
The SEC’s order described how the radio station’s advertisements for Creative Planning took a wrong turn after the show’s host became a client of the investment advisory firm.
During “live reads” of ads, the SEC’s order said, the KMBZ show host “provided client testimonials by mentioning his client relationship with CPI (Creative Planning Inc.), praising his CPI wealth manager by name, and detailing his satisfaction with the advisory services he received from CPI.”
KMBZ’s parent firm Entercom Communications Corp. declined to comment; neither was a target of the SEC’s order.
The SEC’s order said the station aired more than 250 live ads for Creative Planning starting in January 2016. The radio station also created a recorded ad that similarly ran afoul of the no-testimonials rule, the SEC order said, and this spot ran more than 200 times and as recently as October 2017.
According to the order, Creative Planning had not gotten recordings of the live ads or the troublesome recorded ad and declined when KMBZ offered transcripts for some of the live ads.
“We want to be perfect. Clearly, we are not perfect here,” Peter Mallouk, president of Creative Planning told The Star this week.
Mallouk also said it was the first regulatory issue the firm has had in its 35 years and that it would not happen again. Creative planning manages $36 billion for its clients.
The SEC separately fined Mallouk $50,000 for an unrelated violation. The agency’s order said he had failed to report three of his personal financial accounts to the firm.
Mallouk wrote about both infractions in a column posted by RIABiz, which targets registered investment advisers. In it, Mallouk said the firm had not had previous problems with its other recorded radio ads.
He also wrote that the firm assumed the radio station was sticking to “pre-approved talking points” in the live spots and in the new recorded spot. He acknowledged the mistake of not finding out for sure.