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Energy Sector Losses with David Lerner Associates, Inc. Broker Martin Walcoe

Posted on Thursday, June 24th, 2021 at 10:32 pm    

Erez Law is currently investigating David Lerner Associates, Inc. broker Martin Walcoe (CRD# 1593935) regarding energy sector losses. Walcoe has been registered with David Lerner Associates, Inc. in Syosset, New York since 1996. 

It is alleged that David Lerner Associates, Inc. brokers recommended their clients invest in non-public limited partnerships, including Energy Eleven (Energy 11), LP and Energy Resources 12, as well as the Spirit of America Energy (SOAEX) mutual fund, many of which were not suitable for many investors. 

Energy 11, LP is a public non-traded limited partnership that was formed to acquire and develop oil and natural gas properties throughout the United States. Energy 11, LP has raised more than $350 million and has invested the proceeds in non-operated working interests in approximately 221 existing producing wells and approximately 247 future development locations in the Sanish field located in Mountrail County, North Dakota, according to its website. Energy 11, LP is not publicly traded and has limited liquidity. 

The Spirit of America Energy (SOAEX) is a family of mutual funds created exclusively for clients of David Lerner Associates, Inc., and it is comprised of six funds including Real Estate Investment Trusts (REITs) (SOAAX), Income Fund (SOAIX), Municipal Tax Free Bond (SOAMX), Income and Opportunity Fund (SOAOX), Value Fund (SOAVX), and the Energy Fund (SOAEX). According to its website, the fund “seeks to achieve its investment objective by investing at least 80% of its assets in energy and energy-related companies,” according to its website, including Master Limited Partnerships (MLPs), exploration, production, and transmission of energy or energy fuels. According to its site, “Principal Risks of Investing in the Energy Fund: An investment in the Energy Fund could lose money over short or long periods of time. You should expect and be able to bear the risk that the Energy Fund’s share price may fluctuate within a wide range. There is no assurance that the Energy Fund will achieve its investment objective.”

Energy Resources 12 is not publicly traded and has limited liquidity. According to its prospectus, Energy Resources 12 planned to “acquire working and other interests in producing and non-producing oil and natural gas properties in the United States and utilize third-party operators to manage the day-to-day operations. Our primary purposes are to generate revenue from the production and sale of oil and gas from the properties we acquire, participate in drilling and other exploration and development activities initiated by the operators of such properties, and distribute cash to our partners. We do not intend to apply to list the common units for trading on any securities exchange or on the over-the-counter market, except for in connection with a liquidity event.” Energy Resources 12 identified its risk factors on its prospectus being illiquidity, conflicts of interest with the general partner, management’s limited operating experience in the oil and gas industry, as well as no guarantee of any return on your investment or the amount or timing of distributions, among others. 

Walcoe has been the subject of five customer complaints between 2012 and 2021, one of which was closed without action and one was denied, according to his CRD report. Recent complaints are regarding: 

March 2021.Unsuitability, misrepresentation/omission, breach of fiduciary duty.” The customer is seeking $820,000 in damages and the case is currently pending. The complaint was regarding Puerto Rico bonds investment losses.

January 2021. “Unsuitability, misrepresentation/omission, breach of fiduciary duty E11, E12, SOAEX.” The customer is seeking $100,000 in damages and the case is currently pending. The complaint was regarding mutual funds and Energy 11 and Energy Resources 12.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, David Lerner Associates, Inc. may be liable for investment or other losses suffered by Walcoe’s customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.