The allegations read: The securities and exchange commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to section 15(b) of the securities exchange act of 1934 and section 203(f) of the investment advisers act of 1940 against laurence g. Allen. The division of enforcement alleges that according to a complaint in civil action case no. 452378/201913 (n.y. Sup. Ct.) filed on december 4, 2019, by the new york office of the attorney general, allen defrauded investors in his private equity fund, acp x, by investing acp x investor funds in his registered broker-dealer nyppex, contrary to the terms of acp x\\u2019s private placement memorandum. Allen used acp x investor funds to pay nyppex\\u2019s operating expenses and his own salary relating to his work for nyppex. The complaint also alleged that allen misappropriated funds from acp x by making impermissible distributions to himself from acp x, characterized as carried interest that should first have been distributed to the limited partners towards the return of capital and next, their preferred return. After a bench trial, the court issued a decision on february 4, 2021 and an amended decision on february 26, 2021, finding that the nyag had proven by a preponderance of the evidence that allen and the charged entities had: (1) made frequent, material misrepresentations and misleading omissions in communications to the limited partners of acp x; (2) fraudulently caused acp x to make oversized investments in nyppex; (3) gave false and misleading investment advice to acp x to purchase nyppex stock; (4) made false and misleading reports on the value of acp x\\u2019s interest in nyppex to the limited partners and caused acp x to purchase nyppex stock at wildly inflated prices; (5) made false and misleading statements concerning the wind-down of acp x; (6) concealed the merger of nyppex and acp x\\u2019s investment advisor to the acp x limited partners; (7) fraudulently took carried interest to which they were not entitled, pursuant to amendments to the limited partnership agreement that were procured by means of material misrepresentations; and (8) fraudulently caused acp x to cover significant nyppex operating expenses, without fairly disclosing any of these wrongdoings to acp x investors. On march 17, 2021, the court signed a final judgment which was entered by the new york county clerk\\u2019s office on may 4, 2021. The court\\u2019s judgment permanently enjoins allen (and the charged entities) from: taking any action pursuant to the seventh amendment to the amended and restated agreement of the limited partnership agreement of acp x, lp; making distributions from acp x, lp, except to limited partners of acp x, lp on a pro-rata basis to their limited partnership interest in acp x, lp, which distributions must first be approved by the court; making any investments, extending any loans or lines of credit or entering into any agreements on behalf of acp x, lp to or with laurence g. Allen, nyppex holdings, llc, acp partners x, llc, or any other entity in which allen directly or indirectly exercises control or has an ownership interest; facilitating, allowing or participating in the purchase, sale or transfer of any limited partnership interest in acp x, lp; making any payments or distributions from acp x, lp, acp investment group, llc or acp partners x, llc, to defendants, relief defendants, tyler allen, michelle allen, and/or lga investments family limited partnership; withdrawing, converting, transferring, selling or otherwise disposing of funds and assets held by acp investment group, llc, acp x, lp, and acp partners x, llc, wherever they may be situated; and violating article 23-a of the gbl [the martin act], and from engaging in fraudulent, deceptive and illegal acts, and further employing any device, scheme or artifice to defraud or to obtain money or property by means of false pretense, representation or promise.
