The Financial Industry Regulatory Authority has expelled New York broker-dealer NYPPEX for engaging in securities fraud and barred its former CEO, Laurence Allen, for fraud and failing to respond in a timely and complete manner to Finra requests for information and documents. NYPPEX ran a private equity fund.
Finra also barred Michael Schunk, NYPPEX’s current CEO and chief compliance officer, for his failure to supervise Allen and suspended Schunk for two years for engaging in other misconduct — the maximum suspension under Finra’s sanction guidelines.
In May 2021, Finra’s enforcement department filed a nine-cause complaint against NYPPEX, Allen and Schunk alleging a pattern of misconduct that followed a temporary restraining order issued against Allen and others in December 2018 by a New York state court.
The current action came following an 11-day hearing by an extended hearing panel, which ruled in favor of the enforcement department on all nine causes of action.
The panel found that shortly after the December 2018 court order, NYPPEX and Allen started an aggressive sales campaign to raise $10 million by selling interests in NYPPEX’s parent company, NYPPEX Holdings. The panel concluded that during the campaign, NYPPEX and Allen committed securities fraud when they “intentionally or, at a minimum, recklessly” made material misstatements and omissions to prospective investors about NYPPEX Holdings’ valuation and financial condition, the New York court’s order against Allen, and the ongoing investigation by the New York Attorney General into Allen and NYPPEX-affiliated entities, among other matters.
[More: Oppenheimer loses Finra arbitration of $36.7 million stemming from alleged Ponzi]
‘IN the Nasdaq’ with Joel Schiffman, head of intermediary distribution in North America at Schroders
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