The allegations read: Allen first became statutorily disqualified pursuant to a december 28, 2018 ex parte order issued by a new york state court (the "december 2018 order") at the request of the office of the new york attorney general (the "nyag"). The nyag argued that a temporary injunction against allen and his affiliated entities was necessary "because alleged fraudulent practices of respondents threaten continued and immediate injury to the public." the december 2018 order preliminarily enjoined and restrained allen and his affiliated entities from, among other things: (1) engaging in securities fraud; (2) violating new york's securities laws (specifically, new york general business law article 23-a (the "martin act"), which among other things prohibits fraudulent practices relating to investment advice or the purchase, exchange, or sale of securities); (3) facilitating, allowing, or participating in the purchase, sale, or transfer of limited partnership interests in a private equity fund created by allen, acp x, lp (the "limited partnership"); and (4) converting or otherwise disposing of or transferring funds from the limited partnership.
in december 2019, while the temporary injunction against allen and the other defendants remained in place, the nyag filed a complaint against allen and his affiliated entities (including nyppex, llc ("the firm") as a relief defendant).
in february 2020, the court issued a preliminary injunction against, among others, allen, nyppex holdings, llc ("the "parent"), and the firm as a relief defendant. The court enjoined allen and the other defendants from, among other things: directly or indirectly taking any actions to make distributions from the limited partnership (unless made to its limited partners with prior court approval); making any investments, extending loans or lines of credit, or entering into any agreements on behalf of the limited partnership to or with allen, parent, or any other entity that allen directly or indirectly owns or controls; facilitating, allowing, or participating in the purchase, sale, or transfer of limited partnership interests in the limited partnership; transferring, selling, or otherwise disposing of funds or assets of the limited partnership, its general partner, and acp investment group, llc (an investment adviser affiliated with the firm and controlled by allen) (the "investment adviser"); and violating the martin act.
in february 2021, the court issued a permanent injunction, in the same form as the preliminary injunction, against allen, parent, and other affiliated entities (including the firm as a relief defendant). The court found that allen and the other defendants: made frequent, material misrepresentations and misleading omissions to investors in the limited partnership; fraudulently caused the limited partnership to make "oversized" investments in parent; gave false and misleading investment advice to purchase parent's stock to investors in the limited partnership; made false and misleading reports on the value of the limited partnership's interest in parent to investors and caused the limited partnership to purchase parent's stock at "wildly inflated" prices; made false and misleading statements concerning the wind-down of the limited partnership; concealed the merger of parent and the investment adviser (which served as the investment adviser to investors in the limited partnership); fraudulently took carried interest to which allen and the other defendants were not entitled, pursuant to amendments to the limited partnership agreement that were procured by means of material misrepresentations; and fraudulently caused the limited partnership to cover significant operating expenses of parent, without fairly disclosing any of these wrongdoings to the limited partnership's investors.
