The allegations read: Allen was named a respondent in a finra complaint alleging that while statutorily disqualified, he continued to associate with the firm and the firm and its cco, allowed allen to continue to associate with it until over a year later when the firm filed an mc-400 application seeking finra's approval for allen's continued association. The complaint alleges that the office of the new york attorney general (nyag) secured an order, a disqualifying event for allen, from the supreme court of the state of new york preliminarily enjoining and restraining allen and the firm's parent company for, among other things, engaging in securities fraud, violating new york's securities laws, and converting or otherwise disposing of or transferring funds from a private equity fund controlled by allen. The complaint also alleges that undeterred by the nyag's investigation and the preliminary injunctions entered against himself and the parent company, allen devised and orchestrated an aggressive sales campaign to raise $10 million through the sale of securities in the parent company. While soliciting these investments, the firm and allen intentionally or recklessly made a series of material misrepresentations and omissions of material fact to prospective investors concerning, among other things, the valuation of the parent company, its financial condition, and its management team. The firm and allen also failed to disclose to prospective investors the ongoing investigation into allen's and the parent company's alleged fraudulent activity and the order that preliminarily enjoined both of them. The complaint further alleges that the statements made by the firm and allen in connection with their solicitation efforts for the parent company were also not in compliance with the standards for communications set forth in 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. In addition, the complaint alleges that the firm and allen made false or misleading statements on the firm's website about finra's 2018 examination of the firm. The website statements included assertions that the nyag's allegations were in conflict with facts concluded by finra 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 the firm had violated multiple finra rules and provisions of the securities exchange act of 1934. Moreover, nothing about finra's exam findings conflicted with the nyag's allegations. The website also contained statements about allen's and others' so-called exemplary regulatory compliance that were false or at least exaggerated, and which impermissibly implied finra's endorsement. Moreover, the complaint alleges that allen made similar false or misleading statements about finra's 2018 examination of the firm in an affidavit, which he caused to be filed in new york state court. Allen later submitted the same false or misleading affidavit to finra as part of a belated request to continue his association with the firm, despite his statutory disqualification. Furthermore, the complaint alleges that the firm, allen, and the cco provided false or misleading information to finra about the statements posted on the firm's website. The complaint alleges that the firm and allen failed to respond, or failed to timely and completely respond, to finra's requests for information and documents, including requests for bank statements, which would have shown whether any investors bought shares of the parent company following the firm's and allen's fraudulent solicitations.
