Paul Gallivan: SEC Fines Boca Raton Advisor Over Structured Products

The Securities and Exchange Commission recently sanctioned former Aegis Capital broker Paul Gallivan (CRD# 5793918). According to Financial Industry Regulatory Authority records, the former Boca Raton financial advisor misrepresented and sold unsuitable investments in “highly complex, variable interest rate structured products.” He has been suspended from associating with any broker, dealer, or investment advisor for a period of 12 months.

As a disclosure on Mr. Gallivan’s BrokerCheck report notes, the SEC sanctioned him in July 2022. The regulator alleged that between October 2017 and December 2018, he recommended unsuitable VRSPs to four customers, most of whom “were senior investors with low or moderate risk tolerances; limited investment experience with structured products; investment time horizons of less than fifteen years; and moderate or higher liquidity needs.” The SEC adds that these customers “were unwilling to risk losing their entire invested principal” and invested for income-generation purposes. In spite of this, Mr. Gallivan allegedly represented the VSRPs as “similar to ‘bank bonds,'” though, as the SEC explains, they are different “in several ways” from bank bonds. In fact, their differences from traditional bonds—for instance, their variable interest payments and long maturity periods—”contribute to their unsuitability for the customers.” As the SEC notes, the products also come with the risk of partial or entire principal loss. 

The SEC alleged that Mr. Gallivan “made misrepresentations about the risks and characteristics of the VRSPs” and that his statements to the investors “were materially false and misleading,” violating the Securities Act. He was ordered to cease and desist all relevant conduct and to pay a fine of $25,000 as well as disgorgement of $26,807. He was also issued a 12-month suspension from “association with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or NRSRO.” His suspension will commence on August 8, 2022 and end on August 7, 2022. He was also suspended from “participating in any offering of a penny stock” for the same period.

As a recent report by Financial Advisor notes, Mr. Gallivan’s settlement with the SEC coincided with an SEC enforcement action against Aegis Capital, fining the firm $2.3 million “for failing to prevent 14 of its brokers from fraudulently selling unsuitable investments to clients that included retired elderly clients who lost up to hundreds of thousands in the transactions.” 

According to the Financial Industry Regulatory Authority, Paul Gallivan holds 12 years of securities industry experience. Most recently based in Boca Raton, Florida, he has been registered with Alliance Global Partners (2020-2022), Aegis Capital (2017-2020), Morgan Stanley (2015-2017), and Herbert J. Sims & Company (2010-2015). His credentials include the passage of four securities industry qualifying examinations: the Uniform Combined State Law Examination, or Series 66; the General Securities Representative Examination, or Series 7; the Uniform Securities Agent State Law Examination, or Series 63; and the Securities Industry Essentials Examination, or SIE. He is not currently registered as a broker or an investment advisor. (Information current as of August 2, 2022.)

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