SEC Investigation Opened into A.G.P. Investment Advisor Paul Gallivan and Steepener Securities
Paul Gallivan (CRD#: 5793918) is a dually registered Broker and Investment Advisor at A. G. P./Alliance Global Partners in Boca Raton, FL. He entered the securities industry in 2010 and previously worked for Aegis Capital Corp.; Morgan Stanley; and Herbert J. Sims & Co., Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in June 2021, the U.S. Securities and Exchange Commission initiated an investigation into Paul Gallivan. The description of the investigation is as follows: “The SEC investigation entails the sales of Curve Steepener securities.”
In addition, Paul Gallivan has been the subject of five disclosures, including the following:
● December 2020–Paul Gallivan’s bankruptcy was discharged.
● June 2015–A disclosure included a direct payment procedure.
● May 2015–A disclosure included a direct payment procedure.
● August 2014–A disclosure included a direct payment procedure.
● August 2013–A disclosure included a direct payment procedure.
For a copy of Paul Gallivan’s FINRA BrokerCheck, click here.
Steepener Notes, Adjustable Rate Market Notes and Spread Linked Notes are not traditional investments but rather structured products. During the first 12-24 months, the Steepener Notes, Adjustable Rate Market Notes, Spread Linked Notes and Structured Notes generally pay above-average “teaser” rates of interest. However, for each year thereafter until maturity, which can often be 15-20 years, the interest the interest rate is determined by a complex formula that is correlated to a stock index, such as the S&P 500, a fixed income index or a derivative benchmark such as the Constant Maturity Swap Rate, or CMS Swap rate. Depending on the value of the benchmark, the rate of interest paid to the investor may increase to a cap set forth in the prospectus or decrease to zero. These nuances are set forth in the prospectus of the Steepener Notes, Adjustable Rate Market Notes, Spread Linked Notes and Structured Notes but generally not understood by retail customers.
In addition, some Steepener Notes, Adjustable Rate Market Notes, and Spread Linked Notes have call features. This enables the issuer to call (or redeem) the security prior to maturity if, for example, the interest rate environment requires the issuer to pay higher than expected rates of interest to the investor. Alternatively, if the interest rate environment permits the payment of a lower rate of interest, the issuer is under no requirement to call the security. The call feature creates an imbalanced risk/return environment for the customer, who is often lured into the investment with the prospect of higher investment returns. In reality, to the extent a higher return is warranted pursuant to the prospectus, the issuer has the right to call the security if certain other conditions are met. This eliminates the possibility of the investor continuing to receive the higher income.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
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