Trader who took his life after losing $700K was 'impulsive after brain injury'
A Wall Street trader who was left "impulsive" after a brain injury took his own life after losing $700,000, his furious family claims.
William Tyler Allen, 27, from Connecticut, had been dealing in risky stock transactions with platforms Fidelity and Interactive Brokers when he became "distraught" after racking up huge debts. He tragically died by suicide in September 2021 and now his heartbroken family is suing the platforms for allowing Allen to make what they claim were reckless trades.
They claim the platforms allowed him to open self-directed investment funds with a "substantial margin'" despite his "impulsive" condition. They believe the brokers have a duty of care towards vulnerable clients after Allen suffered a traumatic brain injury as a result of a car crash at the age of 19.
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According to his family's lawsuit, he was left with "cognitive impairment" which affected his decision-making, emotional regulation, problem-solving, and processing speed. In addition, it was also claimed his condition meant he made "impulsive and poorly reasoned decisions" - which led to him suffering huge financial losses.
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His loved ones argue the brokers should have performed due diligence and checked whether Allen was a suitable person for their platforms. "Instead, they were content to sit on their hands and collect their fees and commissions,' they said. "Eventually and devastatingly, economic suicide turned into an actual suicide."
The family of William Tyler Allen claim he should never have been given access to risky trading strategies (Facebook)In accordance with financial regulations, brokers should conduct legal and ethical client checks to ascertain suitability for credit. However, Allen's family believes that these precautions were not properly taken.
Allen began dealing in trading options on margin, which is a complex strategy of predicting future stock prices and "understanding 'the nuances of options contracts." The lawsuit claims: "'Due to Tyler's traumatic brain injury, he was unable to fully and properly grasp these complexities."
However, during this period, Allen became licensed with industry regulator FINRA and set up his own brokerage, Summit Equity, of which he made himself Chief Investment Officer. The trader had been looking to use his investment to move in with his girlfriend.
The lawsuit claims the traders were responsible for Allen's death (AP)Lawyer Adam Glassman, who filed the lawsuit for the family, told the Daily Beast : "A 20-something-year-old, when he lost an enormous amount of money, that's difficult for anyone to cope with, let alone a young man who's barely had his frontal cortex close, and who can have the emotional maturity to withstand that.
"So, is this really an unfortunate set of events that, when combined, really led to what I believe to be a tragic outcome." His family is seeking an as yet undetermined amount in punitive and compensatory damages, plus legal costs.
Despite the lawsuit, experts have questioned how the platforms were to know about Allen's brain injury. "The forms that are filled in regarding forms of disclosures do not ask [for] medical information because that is not within the scope of the defendants’ business," Lawyer Carol Crossett, head of Commercial Law Group in the New York City office of Tully Rinckey PLLC, told the outlet.
An Interactive Brokers spokesperson denied they were responsible for Allen's losses, they 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 who was registered with FINRA."
Meanwhile, a Fidelity spokesperson said: "As this is ongoing litigation, it is inappropriate for us to comment."
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