stockbroker misconduct

Laurence Geoffrey Allen of Rye Brook, New York, a stockbroker registered with NYPPEX LLC, has been denied registration as a stockbroker with NYPPEX, LLC, by FINRA’s National Adjudicatory Council because of the potential risk of harm to investors, given that Allen was accused of fraud and violating New York state securities laws. NAC Decision, No. SD-2265 (September 23, 2022).

On March 14, 2022, Securities and Exchange Commission (SEC) also brought administrative proceedings against Allen based upon allegations that Allen committed fraud and violated state securities laws. In the Matter of Laurence G. Allen, Administrative Proceeding No. 3-20795.

SEC’s administrative proceedings, which are intended to determine whether SEC should bar Allen from being a stockbroker and investment adviser representative, are predicated on a complaint brought by the Attorney General of New York, which alleged that investors were defrauded by Allen in ACP X (Allen’s private equity fund), as he invested ACP X funds in NYPPEX against the terms outlined in the ACP X private placement memorandum.

The Attorney General’s complaint alleges that investor funds had been utilized by Allen to pay the operating expenses of NYPPEX in addition to his salary at the securities broker dealer. Additionally, the complaint alleged that funds were misappropriated from ACP X by Allen, as he made distributions from ACP X to himself.

A New York court issued a decision on February 26, 2021, finding that the Attorney General had proven that Allen committed fraud. Specifically, the decision found that misrepresentations and omissions were made to ACP X limited partners; oversized investments were made in NYPPEX by ACP X; misleading and false advice was made to ACP X regarding purchases of NYPPEX equities; misleading and false reports were produced concerning ACP X’s interest in NYPPEX; misleading and false statements were made regarding ACP X’s wind-down; ACP X limited partners were denied knowledge of a merger between ACP X’s investment advisor and NYPPEX; carried interest was fraudulently taken; and that ACP X was used to pay the operating expenses of NYPPEX without investors’ knowledge.

A final judgment signed by the court on March 17, 2021, enjoined Allen from, among other things, making distributions from ACP X LP, making investments on behalf of ACP X LP, and entering into agreements on behalf of ACP X LP.

SEC’s administrative proceedings are ongoing.

Allen’s registration with NYPPEX LLC was terminated on September 23, 2022.