Howard Joseph Allen III of New York, New York, owner of Portfolio Advisors Alliance, LLC, has been charged by Securities and Exchange Commission (SEC) in a Complaint alleging that Allen, inter alia, made fraudulent misrepresentations to investors. Securities and Exchange Commission v. Howard J. Allen III, Civil Action No. 16-cv-00828 (S.D.N.Y. Feb. 3, 2016).

According to the Complaint, between March of 2011 and December of 2013, Portfolio Advisors Alliance, LLC was responsible for selling eighty-five investors an estimated $8,600,000.00 worth of units in AGF II – an entity that was designed to accumulate investor capital to fund business loans. However, SEC alleged that Portfolio Advisors Alliance, LLC made fraudulent omissions and misrepresentations relating to AGF’s financial status, management and audit activities.

Allegedly, the omissions and misrepresentations occurred through the 2011 and 2012 private placement memoranda that AGF II transmitted as well as e-mail correspondence that AGF II’s principal submitted to customers relating to audit activities, where investors were told that AGF’s financial statements had been audited and would be subject of ongoing audits, even though no audits had occurred until 2014.

The Complaint stated that Allen knew that there were misrepresentations made in the private placement memoranda but continuing utilizing them without ever having informed customers regarding the false statements. SEC alleged that Allen’s conduct in that regard was violative of Securities Act of 1933 Section 17(a) and Securities Exchange Act of 1934 Section 10(b), as well as SEC Rule 10b-5.

Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Allen has been fined $10,000.00 and suspended for eight months from associating with any FINRA member in any capacity according to an Office of Hearing Officers Order Accepting Offer of Settlement containing findings that Allen engaged in twelve private securities transactions while associated with Portfolio Advisors Alliance, Inc. and J.P. Turner & Company, L.L.C. Department of Enforcement v. Howard J. Allen, Disciplinary Proceeding No. 2010022586201 (Nov. 16, 2013).

Moreover, FINRA Public Disclosure confirms that Allen has been identified in five additional customer initiated investment related disputes containing accusations of Allen’s misconduct while employed with his previous employer Sands Brothers & Co., LTD. For example, on May 1, 2000, a customer initiated investment related written complaint concerning Allen’s activities was resolved for $105,812.50 in damages based upon allegations that Allen failed to abide by the customer’s investment instructions. Subsequently, a customer was awarded $551,135.00 in damages in reference to an arbitration claim containing findings of unauthorized and excessive trading of over-the-counter equities in the customer’s account. NASD Arbitration No. 00-02784 (July 18, 2002).

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