A Wall Street trader who killed himself after losing $700,000 had a brain injury that left him “impulsive” and should never have made risky investments, his family claims.
William Tyler Allen, 27, died by suicide in September 2021 after becoming ‘distraught’ over suffering the enormous financial loss.
The Connecticut trader traded high-risk stock trades through trading platforms Fidelity and Interactive Brokers before his death.
Now his family is suing the platforms for allowing Allen to open self-directed mutual funds with a “substantial margin” despite his reduced capacity.
They argue that brokers have a duty of care to clients, especially those considered vulnerable.
William Tyler Allen, 27, died by suicide after suffering a $700,000 loss from risky trading strategies that his family says he should never have had access to due to his traumatic brain injury
The Allen family is suing trading platforms Fidelity and Interactive Brokers for failing to conduct due diligence on their son
Allen, who went by his middle name Tyler, suffered a traumatic brain injury as a result of a car accident at the age of 19.
The accident left him with a “cognitive impairment” that affected his decision-making, emotional regulation, problem solving and processing speed, the lawsuit said.
His family claims his condition caused him to make “impulsive and poorly motivated decisions,” causing him to suffer significant financial losses.
They allege that the brokers should have conducted due diligence and determined whether Allen was a suitable candidate for the services he was using.
“Instead, they were content to sit idly by and collect their fees and commissions,” the spokesperson said. “In the end, the economic suicide turned devastatingly into an actual suicide.”
Financial regulations require brokers to conduct legal and ethical Know Your Client Checks to determine credit suitability. Allen’s family claims these precautions were not taken properly.
Instead, he began trading options on margin, a complex strategy that requires predicting future stock prices and understanding “the nuances of options contracts.”
“Because of Tyler’s traumatic brain injury, he was unable to fully and properly understand these complexities,” the lawsuit said.
Allen, pictured with his twin brother Bradley who died of an opioid overdose in 2019, set up a charity in memory of his sibling after his death before succumbing to suicide himself
The 27-year-old became licensed with industry regulator FINRA and founded his own brokerage, Summit Equity, where he served as Chief Investment Officer.
But during this period, Allen also became licensed by industry regulator FINRA and founded his own brokerage, Summit Equity, of which he made himself Chief Investment Officer.
Before his death, the trader was looking forward to using his investment to move in with his girlfriend.
He graduated with a degree in Finance from Miami University in Ohio and proved early on that he was a skilled investor. In 2010, he and his friends won the SIFMA Stock Market Game while they were in 10th grade at Greenwich High School.
He donated his share of the $1,500 prize money to his local church and later went on to work on Wall Street before founding Summit Equity.
Allen suffered a brain injury in 2019 that left him with difficulty making decisions and regulating his emotions, the lawsuit says
His obituary shows that he enjoyed a privileged life with meals at the Four Seasons and exotic vacations, visiting far-flung destinations such as Thailand, Turkey and Vietnam.
The family spent the summer in the Hamptons and took trips to the vineyards in Napa, California, where they bought grapes to make their own wines in Cape Cod.
His life was forever changed by the car crash, but his “spirit remained unbroken,” his family said. However, the lawsuit details how he was plagued by mood swings.
Particularly in business, this led to him making “hasty decisions based on volatile emotions and superficial information” instead of a “comprehensive understanding of market dynamics,” according to the indictment.
But even before his death, his family’s charmed existence was marred by tragedy after his twin brother Bradley died of an opioid overdose in 2019.
He and his family founded Allen Research Endowment, a nonprofit NGO focused on developing new medical technologies for the treatment of addiction, including non-opioid pain management solutions, in memory of his brother.
He is survived by his parents Laurence and Michelle Allen, as well as his sister Lauren.
Attorney Adam Glassman, who filed the suit for the family, told police Daily beast: ‘A twentysomething guy who has lost a huge amount of money is hard for anyone to deal with, let alone a young man who has barely had his frontal cortex close and who may have the emotional maturity to withstand this That.
“So, is this really an unfortunate series of events that, combined, really led to what I think is a tragic outcome?”
The Allen family is seeking an undetermined amount of damages, plus legal fees.
However, experts expressed doubt about the strength of their case and questioned how the platforms were supposed to know about Allen’s brain injury.
The lawsuit was filed in New York and states that the family is seeking punitive and compensatory damages in an amount to be determined by a jury.
“The forms being filled out include: Forms of disclosure do not request medical information because that is not within the scope of the defendants’ activities,” said attorney Carol Crossett, head of the Commercial Law Group’s New York City office . Tully Rinckey PLLC, told the outlet.
A spokesperson for Fidelity said: ‘As this is an ongoing legal case, it is inappropriate for us to comment.’
A spokesperson for Interactive Brokers said: ‘The events surrounding this case are undeniably tragic, but IBKR was not responsible for Mr Allen’s trading losses. Mr. Allen was an experienced investment professional registered with FINRA.”
It is not the first time that such a case has been submitted to court. In 2021, Robinhood settled with Alexander Kearns’ family over his suicide in the wake of a $730,000 loss the year before.
