CEO of David Lerner faces Finra investigation over product sales

investmentnews.com:

Martin Walcoe, the CEO and president of David Lerner Associates Inc., is the latest senior executive at the firm to face an investigation by the Financial Industry Regulatory Authority Inc. over the appropriate or suitable sale of proprietary energy funds to clients.

Walcoe’s investigation is called a “Wells Notice” by Finra, which is essentially a letter informing the investment professional of the substance of allegations and charges the regulator intends to bring.

Two years ago, Finra said it was investigating Daniel T. Lerner, executive vice president, investor services and son of the firm’s founder David Lerner, for similar reasons.

Finra’s investigation of Walcoe was filed in March,<a href=«http://CEO» of david lerner faces finra investigation over product sales.> according to his BrokerCheck profile

. “I strongly disagree with the Finra enforcement staff’s proposed allegations,” he responded on BrokerCheck.

“This is definitely significant that this is a Wells Notice,” said Lawrence L. Klayman, a plaintiff’s attorney. “That suggests the firm violated Finra rules in relation to these energy funds.”

“For a CEO to be investigated by Finra is a pretty serious red flag, traditionally,” said Andrew Stoltmann, a plaintiff’s attorney who has sued David Lerner Associates in the past. “Finra typically examines CEOs when something potentially troubling from a regulatory perspective pops up on the radar.”

“Keeping that in mind, sometimes these investigations don’t lead to anything,” he added.

The regulator has made a preliminary determination to bring a disciplinary action against Walcoe for allegedly failing to supervise in a reasonable manner sales of in-house, proprietary energy funds, according to Finra, and