FINRA Suspends Former CCO Over Supervisory Failures involving GWG L Bonds
The Financial Industry Regulatory Authority has suspended and fined Lester Joel Hochler, the former chief compliance officer of Cape Securities Inc., for failing to reasonably supervise recommendations of speculative debt and complex exchange-traded products to retail customers.
The settlement, detailed in a letter of acceptance, waiver and consent, concludes a matter that originated from two FINRA cause examinations.
According to FINRA findings, between February 2021 and March 2023, Hochler failed to exercise reasonable diligence in overseeing two registered representatives. This period coincided with the implementation of Regulation Best Interest, or Reg BI, which requires broker-dealers to act in the best interest of retail customers at the time a recommendation is made.
From February to April 2021, Hochler approved recommendations made by “Representative 1” for four retail customers to invest a total of $335,000 in GWG L bonds – unrated, speculative, and illiquid debt securities. The customers’ concentrations in alternative investments ranged from 11% to 43% of their liquid net worth, and three of the four customers were older adults and all had moderate risk tolerances that did not include speculation.
GWG Holdings Inc., which raised capital primarily through L bonds sold to retail investors – predominantly retirees seeking income – defaulted on its obligations in January 2022 and filed for bankruptcy in April 2022.
FINRA found that despite red flags, Hochler took no steps to confirm the representative had a reasonable basis for the recommendations before approving them.
Hochler also failed to reasonably supervise “Representative 2,” who recommended that four retail customers – aged 57 to 92 – invest approximately $45,000 in daily-reset NT-ETPs. These complex products are designed to return multiples of a benchmark over a single day and are typically not suitable for retail investors to hold for longer periods.
Without admitting or denying the findings, Hochler consented to a one-month suspension from associating with any FINRA member in all principal capacities, and a $5,000 fine. Further, Hochler must retake and pass the requisite principal examinations before acting in that capacity again.
Hochler served as Cape Securities’ CCO from January 2017 to July 2025. He has been registered in the industry since 1999.
In November 2025, federal prosecutors announced the unsealing of an indictment charging Bradley Heppner, the former chairman of GWG Holdings Inc., with misappropriating more than $150 million from GWG.
Earlier last year, AltsWire reported that investors who had purchased $1.6 billion in GWG L bonds were presented with a proposed settlement offering only a fraction of their initial investment. The proposed settlement was to allocate approximately $31.48 per $1,000 L bond unit, translating to roughly three cents on the dollar, after deductions. These bonds were sold by approximately 40 broker-dealers.
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