Finra Accuses Veteran Compliance Chief of False Disclosures
If a brokerage firm’s chief compliance officer needs to be purer than Caesar’s wife when it comes to his own financial disclosures, then Allen Holeman has a problem.
The Financial Industry Regulatory Authority on Monday filed an enforcement action against the 50-year compliance veteran for failing to timely disclose tax liens totaling $116,000 that were imposed when he was chief compliance officer at Oppenheimer & Co.
Holeman, now CCO of David Lerner Associates in Syosset, NY, did not return a call for comment. In his BrokerCheck filing, he writes that he was not required to report the federal liens on his annual Form U-4 registration updates because the liens were not made against him personally.
In addition to serving as Oppenheimer’s CCO from 2003 to 2013, Holeman has held senior compliance positions at the now-defunct firms E.F. Hutton, Bear Stearns and Tucker Anthony, according to his LinkedIn profile page.
Holeman’s long experience could weigh against him, said one lawyer.
“When you have someone who has been in the industry for decades, they can’t use the old, ‘Gee, I’m a babe in the woods and I just didn’t know’ [argument],” said Andrew Stoltmann, a Chicago-based plaintiff’s attorney who said he is not familiar with Holeman or the filing. “A newbie in the industry gets cut a little more slack than a wily veteran.”
Finra’s decision to refer the case to its enforcement division is more evidence of the self-regulatory organization’s push to make compliance culture a “tone-at-the-top” issue and of its renewed effort to wield disclosure violations as a prosecutorial tool.
In pressing for monetary and other sanctions, Finra accused Holeman of violating rules and bylaws regarding high standards of commercial honor and just and equitable principles of trade. It also said he misled Oppenheimer by filing inaccurate annual compliance questionnaires with the company in 2009 and 2011.
Finra last month suspended Oppenheimer managing director Michael Marchassalla from supervisory roles in the securities industry for five months and fined him $10,000 for failing to disclose five tax liens on his U-4 updates. Marchassalla was a top recruiter in the firm’s New York City hometown market.
Morgan Stanley earlier this year fired former star broker Ami Forte, whose alleged mishandling of a client’s account cost it $33 million, for failing to report tax liens on her U-4 questionnaires, among other violations.
Holeman, who joined David Lerner in November 2013, failed to disclose until April 2015 liens from the Internal Revenue Service of $58,853 in 2009 and of $18,444 in 2011, the Finra enforcement action said.
Finra notified him in June 2015 that it was likely to recommend a disciplinary action against him. On his BrokerCheck page, Holeman said he filed tax forms on time in both cases and entered into installment payment agreements with the IRS. A third IRS lien of $39,247 in 2009 that Finra cited has been satisfied, he wrote.
Holeman has no other disclosure notices in the BrokerCheck database.
“FINRA’s allegations against Mr. Holeman relate to issues which arose years before his employment at David Lerner Associates, Inc. and stem from technical, U-4 disclosure/amendment requirements,” a firm spokesman wrote in an e-mail, adding that Lerner itself is not named as a respondent in the action.
An Oppenheimer spokeswoman did not return a call for comment.