Securities Arbitration Lawyer Blog
The Financial Industry Regulatory Authority’s Department of Enforcement has filed a disciplinary proceeding complaint against brokerage firm NYPPEX, LLC (CRD No. 47654), Former Chief Executive Officer (“CEO”) Laurence Allen (CRD No. 1063970), and Chief Compliance Officer (“CCO”) Michael Schunk (CRD No. 732595). The complaint alleges:
- Allen continued to serve as NYPPEX, LLC’s CEO after being statutorily disqualified in December 2018 when the Office of the New York Attorney General (“New York Attorney General”) secured an Ex Parte Order (the “Order”) from the Supreme Court of the State of New York that preliminarily enjoined and restrained Mr. Allen and NYPPEX Holdings from engaging in securities fraud, violating New York Securities law, and converting or otherwise disposing of or transferring funds from ACP X, LP, a private equity fund controlled by Mr. Allen. NYPPEX, LLC’s CCO Michael Schunk allowed Mr. Allen to continue to associate as NYPPEX, LLC’s CEO despite his statutory disqualification.
- In March 2019, Mr. Allen devised and orchestrated an aggressive sales campaign to raise $10 million for NYPPEX Holdings through the sale of securities in NYPPEX Holdings. While soliciting these investments, NYPPEX, LLC, and Allen intentionally or recklessly made a series of material misrepresentations and omissions of material fact to prospective investors concerning, among other things, NYPPEX Holdings’ valuation, its financial condition, and its management team. NYPPEX and Allen also failed to disclose to prospective investors the New York Attorney General’s ongoing investigation into Mr. Allen’s and NYPPEX Holdings’ alleged fraudulent activity and the Order that preliminarily enjoined both of them.
- The statements made by NYPPEX, LLC and Mr. Allen in connection with their solicitation efforts for NYPPEX Holdings also were not in compliance with the standards for communications set forth in FINRA’s advertising rule, FINRA Rule 2210. These communications were not fair and balanced, omitted material facts, contained false or misleading statements, and failed to disclose the risks and potential benefits in a balanced way.
- NYPPEX, LLC and Mr. Allen made false and misleading statements on the firm’s website about FINRA’s 2018 examination of NYPPEX. The website statements included assertions that the New York Attorney General’s allegations were in “conflict” with facts concluded by FIRNA and that FINRA had found no violations during its examination. In fact, FINRA’s 2018 examination had resulted in an informal disciplinary action based on findings that NYPPEX had violated multiple FINRA rules and provisions of the Securities Exchange Act of 1937 (Exchange Act). Moreover, nothing about FINRA’s exam findings conflicted with the New York Attorney General’s allegations.
- Allen submitted a false and misleading affidavit to FINRA as part of a belated request to continue his association with NYPPEX, despite his statutory disqualification.
- NYPPEX, LLC and Mr. Schunk, who were responsible for supervising Mr. Allen’s activities, failed to reasonably supervise Mr. Allen.
- NYPPEX, LLC, Mr. Allen, and Mr. Schunk, in response to a FINRA Rule 8210 request issued by FINRA’s Advertising Regulation Department, provided false and misleading information to FINRA about the statement posted on NYPPEX, LLC’s website.
- NYPPEX, LLC and Mr. Allen failed to respond or failed to respond completely and completely to a number of requests for information and documents made pursuant to FINRA Rule 8210, including requests for bank statements, which would have shown whether any investors bought shares of NYPPEX Holdings following NYPPEX, LLC’s and Mr. Allen’s fraudulent solicitations.
Laurence Allen is the CEO of NYPPEX, LLC and has held the role since 2000. Mr. Allen is also the CEO and majority owner of NYPPEX Holdings and ACP X’s general partners, ACP Partners X, LLC. Mr. Allen has 38 years of experience in the securities industry.
Michael Schunk has served NYPPEX’s CCO since 2010. He s also CCO for NYPPEX Holdings and has compliance responsibilities for ACP X. Mr. Schunk has 39 years of experience in the securities industry.
NYPPEX, LLC has been a member firm since 1999. The firm is primarily involved in the sale of private placements to institutional customers. The firm’s business is also focused on the secondary market for private equity funds. NYPPEX, LLC has one branch office in Rye Brook, New York. Since March 2019, the following individuals have been registered with NYPPEX, LLC:
- Laurence Allen, CEO (Rye Brook, NY).
- Michael Schunk, CCO (Rye Brook, NY).
- Craig Blitz (Rye Brook, NY).
- Jeff Grendi (Bethesda, MD).
- Amra Pasic (Bethesda, MD).
- William Allen (Bethesda, MD).
- Louis Achille Almerini (Bethesda, MD).
- Christopher Bruno (Bethesda, MD).
- David Cervantes (Bethesda, MD).
- Frank Nunziato (Rye Brook, NY).
- Monique Romero (Bethesda, MD).
According to the complaint, in March 2019, Mr. Allen and NYPPEX, LLC launched an aggressive sales campaign to sell NYPPEX Holdings units. Each unit consisted of one share of Series E preferred stock and one warrant exercisable into a share of common stock at an exercise price of $1.00. The complaint alleges that Mr. Allen, and registered representatives of NYPPEX, LLC, acting at Mr. Allen’s direction, made material misrepresentations and omissions connected to their pitch of an investment opportunity in NYPPEX Holdings. Marketing efforts that began in March 2019, including:
- Sending out solicitation emails to more than 200 prospective investors.
- A webinar presentation on March 22, 2019.
- Cold-calling prospective investors to solicit investments in NYPPEX Holdings, using a voicemail script and discussion points.
Retail and institutional investors who were misled to invest in NYPPEX Holdings by NYPPEX, LLC or one of its brokers should contact securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of their legal rights. New York securities arbitration attorney August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA arbitration claims nationwide on behalf of retail and institutional investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.
We have litigated claims before both FINRA and JAMS for retail and institutional investors across the continental United States and Puerto Rico. We also represent retail and institutional international investors with assets in the United States that have suffered investment losses because of misconduct by a broker-dealer under FINRA jurisdiction.