Compliance Registration Error Causes NAPFA Chair-Elect to Resign

Ron Rhoades, the chair-elect for the National Association of Personal Financial Advisors (NAPFA) for 2012-13, announced he would resign.

In a statement released late Monday, NAPFA said Rhoades decided to step down after disclosing that he had committed a compliance violation by failing to file registration papers with the State of Florida Division of Securities. “Ron informed NAPFA of this violation, and the National Board has decided to move on in 2012-13 without Ron as the chair,” NAPFA said. “To fill the vacated chair position on NAPFA’s National Board, the Board will hold a special election next month. Until that time, Susan John has agreed to continue on as Chair until the special election is held.”

The organization released its statement after Rhoades earlier on Monday made public the reason for his resignation. Rhoades said that over the previous several weeks, he found out that he and his firm had committed a compliance violation by failing to file registration papers on time with the State of Florida Division of Securities.

Rhoades, president and chief compliance officer of ScholarFi Inc., said the company was formed in September 2011 as a state-registered firm in New York.  The firm accepted a total of 11 clients from Florida, which exceeds the de minimis threshold of five clients for registration in Florida. “I had considered in the late summer of 2011 whether to register in Florida, but mistakenly believed that I could wait until the first quarter of 2012 to register with the state,” Rhoades said.

Rhoades said that registration documents were submitted to the state in February 2012, but in late May 2012 he was made aware of the mistake. He ended his statement by saying, “Since then I have undertaken candid disclosures of all requested facts to the state, and I await their final determination of this matter.   

“While my mistake was unintentional, the violation of compliance regulations is nevertheless material in nature,” Rhoades said. “The mistake made was mine, and mine alone. I accept full responsibility for my personal mistake, and all consequences that may flow therefrom, including the decision by NAPFA to move on without me serving as chair in the coming year.”