A senior compliance executive at David Lerner Associates Inc. has lost his appeal of a fine and suspension by the
Financial Industry Regulatory Authority Inc. over unreported tax liens, with the appeals committee calling the executive's explanation for his actions "nonsensical," "specious" and "illogical."
Last year, a Finra hearing panel found that the executive, Allen Holeman, chief compliance officer at David Lerner, failed to disclose on his public employment record three federal tax liens, a violation of industry rules.
Mr. Holeman failed to report three IRS tax liens, two from 2009 and one from 2011, totaling close to $157,000. Brokers and executives registered with Finra are required to report such events. Mr. Holeman worked at Oppenheimer & Co. before moving to David Lerner in 2013,
according to his BrokerCheck report.
In 2014, Mr. Holeman told Finra that "he did not recall receiving notice of the liens,"
according to the decision, which was issued Monday by Finra's National Adjudicatory Council, or NAC.
"I was advised by an IRS agent that the liens were against physical property not against me personally," he told Finra in 2014, according to the decision. Finra sued Mr. Holeman in 2016, alleging he willfully failed to timely disclose the liens. In 2017, a Finra panel suspended him for a month and fined him $10,000, a decision which Mr. Holeman appealed to the NAC.
In losing his appeal, Mr. Holeman was fined $20,000 and suspended four months.
"I believe this decision is in error, and it will be appealed to the Securities and Exchange Commission," Mr. Holeman said Tuesday.
The NAC decision calls Mr. Holeman's arguments that he never received notice of the liens and that he was subject to an IRS installment agreement "specious."
Mr. Holeman "separately argues that he did not believe that he was obligated to disclose the federal tax liens because they attached to his property, rather than to him," according to the NAC decision. "This contention is nonsensical for two key reasons."
"First, it is simply not plausible that a CCO with over 40 years of compliance experience in the securities industry would not know or understand what a 'lien' is and whether it needs to be disclosed," according to the decision. "Second, a lien can only apply to property — it cannot attach to a person — making Holeman's justifications for not disclosing it illogical."
Related article: Introduction to tax lien investing
