New York began its probe of Allen and his companies at least a year ago, when the state secured a court order requiring him to produce documents and appear for examinations. The order also barred Allen from making any payouts from ACP to himself or his family members.
James alleges investors began asking Allen about possible conflicts of interest in the relationship between the fund and the broker-dealer, and that Allen allegedly threatened them with legal action if they kept asking about it. Allen doesn’t see it that way.
“The NYAG is attempting to overturn amendments to a private-equity fund that were drafted by outside legal counsel and approved by the required majority of sophisticated limited partners,” Allen said.
Salary Expense
The biggest expense at Nyppex was Allen’s salary, which reached more than $900,000 in 2016 even though the company had revenue of only $2.3 million and an operating loss of $870,000, according to the complaint.
New York also claims Allen failed to deliver on a boast that investors would benefit from a new trading tool his company had developed.
“Though Allen claimed for years that Nyppex has been on the verge of monetizing an online trading ‘platform’ used in connection with the broker-dealer’s trading activities, the company has failed to realize any revenue from the tool,” the complaint says.
This article was provided by Bloomberg News.
Editor's Note: NYPPEX and its CEO Laurence Allen vigorously denied the New York Attorney General's claims in a statement released on Dec. 25, 2019. Among other things, the statement accuses the Attorney General's office of several misrepresentations in a "politically motivated" prosecution that misapplies the Martin Act.