A Wall Street trader who took his own life after losing $700,000 had a brain injury which left him ‘impulsive’ and should never have been allowed to make risky investments, his family claim.
William Tyler Allen, 27, died by suicide in September 2021 after becoming ‘distraught’ over sustaining the massive financial loss.
The Connecticut trader had been dealing in risky stock transactions using trading platforms Fidelity and Interactive Brokers prior to his death.
Now his family is suing the platforms for allowing Allen to open self-directed investment funds with a ‘substantial margin’ despite his reduced capacity.
They argue the brokers have a duty of care towards clients, especially those considered vulnerable.
William Tyler Allen, 27, died by suicide after sustaining a $700,000 loss through risky trading strategies his family say he should never have been given access to due to his traumatic brain injury
The Allen family is suing trading platforms Fidelity and Interactive Brokers claiming they did not perform due diligence against their son
Allen, who went by his middle name of Tyler, suffered from a traumatic brain injury as a result of a car crash when he was 19.
The accident left him with ‘cognitive impairment’ which affected his decision-making, emotional regulation, problem-solving and processing speed, according to the lawsuit.
His family state that his condition meant that he made ‘impulsive and poorly reasoned decisions’ which led to him suffering significant financial losses.
They claim the brokers should have performed due diligence and checked whether Allen was as suitable candidate for the services he was using.
‘Instead, they were content to sit on their hands and collect their fees and commissions,’ the said. ‘Eventually and devastatingly, economic suicide turned into an actual suicide.’
Financial regulations dictate that brokers should conduct legal and ethical Know Your Client Checks to ascertain suitability for credit. Allen’s family argue that these precautions were not properly taken.
Instead he began dealing in trading options on margin, a complex strategy which requires prediction of future stock prices and understanding ‘the nuances of option contracts.’
‘Due to Tyler’s traumatic brain injury, he was unable to fully and properly grasp these complexities,’ the lawsuit states.
Allen, pictured with his twin brother Bradley who died of an opiate overdose in 2019, set up a charity in memory of his sibling following his death before succumbing to suicide himself
The 27-year-old became licensed with industry regulator FINRA and set up his own brokerage, Summit Equity, of which was Chief Investment Officer
But during this period, Allen also became licensed with industry regulator FINRA and set up his own brokerage, Summit Equity, of which he made himself Chief Investment Officer.
Prior to his death, the trader had been looking forward to using his investment to move in with his girlfriend.
A Finance graduate of Miami University in Ohio, he proved himself early on as a capable investor. In 2010 he and his friends won the SIFMA Stock Market Game while a 10th grader at Greenwich High School.
He donated his $1,500 share of the prize money to his local church and later went on to work on Wall Street before setting up Summit Equity.
Allen sustained a brain injury in 2019 which left him with problems making decisions and regulating his emotions, the lawsuit states
His obituary reveals he enjoyed a privileged life of meals at the Four Seasons and exotic holidays and visited far flung destinations such as Thailand, Turkey and Vietnam.
The family summered 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 changed for ever by the auto accident, but his ‘spirit remained unbroken’ his family said. However, the lawsuit details how he was plagued by mood swings.
In business particularly, this led to him making, ‘rash decisions based on fleeting emotions and surface-level information’ rather than a ‘comprehensive understanding of market dynamics’, according to the suit.
But even before his death, his family’s charmed existence was marred by tragedy after his twin Bradley died of an opioid overdose in 2019.
Alongside his family, he set up Allen Research Endowment, an NGO non-profit which focuses on developing new medical technologies to treat 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 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.’
The Allen family is seeking an as yet undetermined amount in punitive and compensatory damages, plus legal costs.
However, experts expressed doubt over the strength of their case and have questioned how the platforms were to know about Allen’s brain injury.
The lawsuit was filed in New York and states the family is seeking punitive and compensatory damages of an amount to be determined by a jury
‘The forms that are filled in re: forms of disclosures do not ask [for] medical information because that is not within the scope of the defendants’ business,’ Attorney Carol Crossett, head of Commercial Law Group in the New York City office of Tully Rinckey PLLC, told the outlet.
A Fidelity spokesperson said: ‘As this is ongoing litigation, it is inappropriate for us to comment.’
An Interactive Brokers spokesperson 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.’
It is not the first time such a case has been presented to the courts. In 2021, Robinhood settled with the family of Alexander Kearns over his suicide in the wake of a $730,000 loss the year before.