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SEC and FINRA Take Regulatory Action Against Laurence Allen

Laurence Allen (CRD #: 1063970), a broker registered with NYPPEX, is the subject of several regulatory actions, according to his BrokerCheck record, accessed on May 9, 2022. Read on if you have questions about Laurence Allen’s conduct as a broker.

SEC Action

On March 14, 2022, the SEC began administrative proceedings against Laurence Allen based on allegations raised by a lawsuit brought by the New York attorney general in 2019.

According to the New York Attorney General, Laurence Allen defrauded investors in the following manner: 

  • He allegedly invested ACP X investor funds in his registered broker-dealer NYPEX, contrary to the terms of ACP‘s private placement memorandum. 
  • Laurence Allen also allegedly used ACP X investor funds to pay NYPPEX’s operating expenses and his own salary. 
  • He also allegedly gave investors misleading reports on the value of ACP X’s interest in NYPPEX to the limited partners, causing ACP X to purchase NYPPEX at “wildly inflated prices.”
  • Laurence Allen allegedly concealed the merger of NYPPEX and ACP X’s Investment Advisor to the ACP X Limited Partners 
  • Laurence Allen fraudulently caused ACP X to cover a significant portion of NYPPEX’s operating expenses without disclosing this to ACP X investors.

These proceedings by the SEC are currently pending.

FINRA Complaint

A FINRA complaint filed on May 27, 2021, alleges the following:

Laurence Allen continued to associate with a firm while statutorily disqualified. Stock brokers may be statutorily disqualified if they are convicted of a felony or certain misdemeanors, like forgery. 

The complaint further alleges that the New York Attorney General secured an order from the Supreme Court of New Work restraining Laurence Allen from engaging in securities fraud, violating New York’s securities laws, and converting or otherwise disposing of or transferring funds from a private equity fund controlled by Laurence Allen. 

  • Laurence Allen violated this order by continuing to associate with NYPPEX and its chief compliance officer Michael Schunk.
  • In March of 2019, Laurence Allen aggressively solicited purchases of securities in NYPPEX Holdings, raising $10 million.
  • Laurence Allen misrepresented and omitted information while making these sales, including NYPPEX Holdings’ valuation, financial condition, management team, and the ongoing investigation into both himself and NYPPEX. 
  • Other misrepresentations of NYPPEX’s regulatory compliance and FINRA’s endorsement of the firm on NYPPEX’s website, and other false or misleading statements made by Laurence Allen in an affidavit.
  • NYPPEX and Michael Schunk “failed to reasonably supervise” Laurence Allen.
  • FINRA alleges a failure to respond to requests for information on the part of Laurence Allen and NYPPEX.

The complaint concludes that these allegations constitute violations of the following rules and regulations:

  • Sections 17(a)(1) and 17(a)(3) of the Securities Act
  • Article III, Section 3(b) of FINRA’s By-Laws
  • FINRA Rule 2210(d) and 2210(e)
  • FINRA Rule 3110(a)
  • FINRA Rule 8210
  • Multiple violations of FINRA Rule 2010

The complaint is still pending. You can read the full FINRA complaint here.

FINRA Rule 2210

FINRA Rule 2210 defines how FINRA members can communicate with the public, such as through advertising or on their websites, and what information they can disclose.

Rule 2210(d) requires all member communications must be based in good faith, fairness, and clarity, and cannot be misleading or false.

Rule 2210(e) restricts how firms can use FINRA’s name and make reference to FINRA membership. This rule serves to prevent false implications of FINRA endorsement or otherwise misleading investors about the reputation or quality of a firm.

FINRA Rules 8210 and 3110

FINRA Rule 8210 requires all FINRA members to promptly comply with requests for information, documents, and testimony in connection with FINRA investigations and outlines the penalties for failing to do so.

Failure to supervise violates FINRA Rule 3110, which requires firms to establish and maintain supervisory systems.

FINRA Rule 2010

Violations of the above rules are frequently automatic violations of FINRA Rule 2010, which holds FINRA members to high standards of ethical conduct and professional honor.

Revocation of Registration in Connecticut

On February 21, 2020, the Banking Commissioner of Connecticut issued a Notice of Intent to Deny Registration as Broker-dealer, Notice of Intent to Revoke Registration as a Broker-dealer Agent, and a Notice of Right to Hearing for Laurence Allen and NYPPEX, LLC.

These notices followed allegations raised in the 2019 lawsuit brought by the Attorney General of the State of New York, specifically regarding NYPPEX and Laurence Allen’s involvement in fraudulent, deceptive, and illegal acts regarding limited partnership investments.

Though the notices were issued in 2020, this regulatory action is currently pending.

Lawsuits by New York Attorney General

On December 4, 2019, the New York Attorney General named Laurence Allen in a lawsuit alleging violations of the Martin Act, a New York State anti-fraud law, as well as other violations. Laurence Allen was required to pay a $6,000,000 disgorgement as a result of this suit.

On December 20, 2018, the New York Attorney General alleged Laurence Allen had engaged in fraud. The suit was stayed on May 20, 2021, and the case remains pending.

Background Information

Laurence Allen has passed the following exams:

  • Series 65 – Uniform Investment Adviser Law Examination 
  • Series 63 – Uniform Securities Agent State Law Examination
  • SIE – Securities Industry Essentials Examination
  • Series 5 – Interest Rate Options Examination
  • Series 7 – General Securities Representative Examination
  • Series 3 – National Commodity Futures Examination
  • Series 24 – General Securities Principal Examination

He has also worked for the following firms:

  • ACP Investment Group (CRD#:127443)
  • Northeast Securities (CRD#:25996)
  • Bear, Stearns & Company (CRD#:79)
  • Merrill Lynch, Pierce, Fenner & Smith (CRD#:7691)

Kurta Law Can Help

If you worked with Laurence Allen and you have concerns about your investments, please contact us today at 877-600-0098 or for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.