U.S. Securities and Exchange Commission v. Appelbaum

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 11085 / July 28, 2022 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 95389 / July 28, 2022 
 
INVESTMENT ADVISERS ACT OF 1940 
Release No. 6075 / July 28, 2022 
 
INVESTMENT COMPANY ACT OF 1940 
Release No. 34655 / July 28, 2022 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-20939 
 
ORDER INSTITUTING ADMINISTRATIVE AND 
CEASE-AND-DESIST PROCEEDINGS 
PURSUANT TO SECTION 8A OF THE 
SECURITIES ACT OF 1933, SECTION 15(b) OF 
THE SECURITIES EXCHANGE ACT OF 1934, 
SECTION 203(f) OF THE INVESTMENT 
ADVISERS ACT OF 1940, AND SECTION 9(b) OF 
THE INVESTMENT COMPANY ACT OF 1940, 
MAKING FINDINGS, AND IMPOSING 
REMEDIAL SANCTIONS AND A CEASE-AND-
DESIST ORDER 
I. 
The Securities and Exchange Commission (the “Commission” or “SEC”) deems it 
appropriate and in the public interest that public administrative and cease-and-desist proceedings 
be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities 
Act”), Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), Section 203(f) of 
the Investment Advisers Act of 1940 (“Advisers Act”), and Section 9(b) of the Investment 
Company Act of 1940 (“Investment Company Act”), against Paul F. Gallivan (“Gallivan” or 
“Respondent”). 
II. 
In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”), which the Commission has determined to accept. Solely for the 
purposes of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the 
findings herein, except as to the Commission’s jurisdiction over him and the subject matter of 
these proceedings, which are admitted, and except as provided herein in Section V., Respondent 
consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 
Pursuant to Section 8A of the Securities Act of 1933, Section 15(b) of the Securities Exchange Act 
of 1934, Section 203(f) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment 
 
In the Matter of 
 
PAUL F. GALLIVAN, 
 
Respondent.  
 
 

 
 
2 
 
 
 
Company Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-
Desist Order (“Order”), as set forth below. 
III. 
On the basis of this Order and the Offer, the Commission finds
1
 that: 
SUMMARY 
1. These proceedings arise from unsuitable recommendations and misrepresentations to 
certain retail customers by Paul F. Gallivan in connection with sales of highly-complex, variable 
interest rate structured products (“VRSPs”).  
Respondent 
2. Gallivan, 49, is a resident of Del Ray Beach, Florida.  Gallivan has been a registered 
representative since 2010 and an investment adviser representative since 2015.  Gallivan was associated with 
Aegis Capital Corp., a registered broker-dealer and investment adviser, from August 2017 to September 2020.   
He holds FINRA Series 7, 63, and 66 licenses.  
Gallivan Made Unsuitable Recommendations of VRSPs  
3.   Registered Representatives (“RRs”) have a fundamental responsibility to deal fairly 
with their customers.  This responsibility of fair dealing requires that prior to recommending a 
security to a customer, RRs must make a determination that a particular investment is suitable for 
that customer in light of the customer’s investment objectives, as determined by the customer’s 
financial needs and financial condition, which include, among other things, risk tolerance, age, 
investment experience, and/or investment time horizons.  See Steven E. Muth and Richard J. Rouse, 
Exchange Act Rel. No. 52551, at *18 (Oct. 3, 2005) (Comm. Op.).  RRs who make unsuitable 
recommendations may violate the anti-fraud provisions of the federal securities laws, including 
Securities Act Sections 17(a)(2) and 17(a)(3). 
4. From October 2017 through December 2018, Gallivan made unsuitable 
recommendations of VRSPs to four customers.  Most of the customers 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 customers also were 
unwilling to risk losing their entire invested principal from their investments, and they relied on 
periodic interest payments from their investments to meet their income needs.   
5. In recommending VRSPs to the customers, Gallivan described the securities as being 
similar to “bank bonds.”  However, the VRSPs differed from traditional bonds issued by financial 
institutions in several important ways.  First, unlike traditional bonds, which provide periodic fixed-
interest payments that are directly linked to a bond issuer’s ability to make periodic payments and 
                                                           
1
 The findings herein are made pursuant to Respondent’s Offer and are not binding on any other person or entity in this 
proceeding or any other proceedings.  

 
 
3 
 
 
 
which repay principal at maturity, the VRSPs offer variable interest payments based on formulas 
tied to differences in Constant Maturity Swap (“CMS”) rates for longer term and shorter term United 
States Treasury obligations, as well as to the performance of reference assets, such as certain equity 
indexes.   
6. The VRSPs initially pay fixed introductory or “teaser” rates for one to five years.  
After the introductory period, additional interest payments are not guaranteed and are contingent on 
the performance and interplay of the VRSPs derivative components such as the CMS rates and 
underlying reference indexes.  These characteristics contribute to their unsuitability for the customers, 
who relied on periodic interest payments from their investments to meet their income needs. 
7. In addition, most of the VRSPs sold to the customers have maturity periods of fifteen 
years or more and typically lack active secondary markets, with no assurance of liquidity.  These 
characteristics contribute to their unsuitability for the customers, who had investment time horizons of 
less than fifteen years and moderate or higher liquidity needs.    
8. Also unlike traditional bonds, the VRSPs are “principal-at-risk” securities, which means 
that the customers can lose some or all of their invested principal at maturity if the VRSPs’ respective 
reference assets fail to perform within pre-determined ranges at maturity.   As several preliminary 
prospectuses for the VRSPs expressly warn:  “There is no minimum payment at maturity.  Accordingly, 
investors may lose up to their entire initial investment in the securities.” This characteristic contributes 
to their unsuitability for the customers, who were unwilling to risk losing their entire invested principal 
from their investments. 
Gallivan Made Misrepresentations about the VRSPs to Customers   
9. Gallivan made misrepresentations about the risks and characteristics of the VRSPs.  
Gallivan’s material misrepresentations to customers include a: 
a) May 2018 email, in which Gallivan wrote to a customer, “You will see that your 
actual “[sic] par amount is 154,000.  This is the amount that the issuers will be paying 
you if they call the bonds in early or if we hold them to their final maturity dates.  All 
of your bonds are callable at par/100 cents on the dollar.”; and 
b) May 2018 email, in which Gallivan wrote to another customer, “you will see your 
actual par-amount-$102k.  This is what your bond are worth if the[y] are called in 
earlier by the issuer or if they are held to their finally [sic] maturity date.”   
10. Each of Gallivan’s foregoing statements was materially false and misleading. 
Gallivan knew or reasonably should have known at the time that he made these statements that 
VRSPs are not principal protected.  
11. By the foregoing conduct, Gallivan willfully violated Securities Act Sections 17(a)(2) 
and 17(a)(3).  
 

 
 
4 
 
 
 
12. The disgorgement and prejudgment interest ordered in Section IV.E. below is 
consistent with equitable principles and does not exceed Respondent’s net profits from its violations 
and will be distributed to harmed investors, if feasible.  The Commission will hold funds paid 
pursuant to Section IV.E. in an account at the United States Treasury pending a decision whether the 
Commission in its discretion will seek to distribute funds.  If a distribution is determined feasible 
and the Commission makes a distribution, upon approval of the distribution final accounting by the 
Commission, any amounts remaining that are infeasible to return to investors, and any amounts 
returned to the Commission in the future that are infeasible to return to investors, may be transferred 
to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange Act.   
Undertaking 
 13. Gallivan has undertaken to provide the Commission, within thirty days after the end of 
the twelve-month suspension period described below, an affidavit attesting that he has complied fully 
with the sanctions described in Sections IV.B. through IV.D., below. 
IV. 
In view of the foregoing, the Commission deems it appropriate and in the public interest to 
impose the sanctions agreed to in Gallivan’s Offer. 
Accordingly, pursuant to Section 8A of the Securities Act, Section 15(b) of the Exchange Act, 
Section 203(f) of the Advisers Act, and Section 9(b) of the Investment Company Act it is hereby 
ORDERED that: 
A. Gallivan shall cease and desist from committing or causing any violations and any 
future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act; 
B. Gallivan be, and hereby is, suspended from association with any broker, dealer, 
investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally 
recognized statistical rating organization for twelve months, effective on the second Monday 
following the entry of this Order.  
C. Gallivan be, and hereby is, suspended from participating, directly or indirectly, in 
any offering of a penny stock, including:  acting directly or indirectly as a promoter, finder, 
consultant, agent or other person who engages in activities with another broker, dealer or issuer for 
purpose of the issuance or trading in any penny stock, or inducing or attempting to induce the 
purchase or sale of any penny stock for a period of twelve months, effective on the second Monday 
following the entry of this Order.   
D. Gallivan is prohibited from serving or acting as an employee, officer, director, 
member of an advisory board, investment adviser or depositor of, or principal underwriter for, a 
registered investment company or affiliated person of such investment adviser, depositor, or 
principal underwriter for a period of twelve months, effective on the second Monday following the 
entry of this Order. 

 
 
5 
 
 
 
E. Gallivan shall pay disgorgement of $26,807, prejudgment interest of $3,166, and a 
civil money penalty in the amount of $25,000 to the SEC.  Payment shall be made in the following 
installments:   
1. $15,000 within 10 days of the entry of the Order; and 
2. $15,000 within 90 days of the entry of the Order; and 
3. $15,000 within 180 days of the entry of the Order; and 
4. final payment within 270 days of the entry of the Order (see below). 
Payments shall be applied first to post-order interest, which accrues pursuant to SEC Rule 
of Practice 600 and 31 U.S.C. § 3717.  Prior to making the final payment set forth herein, 
Respondent shall contact the staff of the Commission for the amount due.  If Respondent fails to 
make any payment by the date agreed and/or in the amount agreed according to the schedule set 
forth above, all outstanding payments under this Order, including post-order interest, minus any 
payments made, shall become due and payable immediately at the discretion of the staff of the 
Commission without further application to the Commission. 
Payments must be made in one of the following ways: 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request; 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 
(3) Respondent may pay by certified check, bank cashier’s check, or United States 
postal money order, made payable to the “Securities and Exchange 
Commission (for transfer to the general fund of United States Treasury in 
accordance with Exchange Act Section 21F(g)(3))” and hand-delivered or 
mailed to: 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169. 
A payment made by check or money order must be accompanied by a cover letter identifying Paul F. 
Gallivan as Respondent in these proceedings, and the file number of these proceedings; a copy of the 
cover letter and check or money order must be sent to Yuri B. Zelinsky, Assistant Director, Division 
of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-
5041. 
 

 
 
6 
 
 
 
F. Regardless of whether the Commission in its discretion orders the creation of a Fair 
Fund for the penalties ordered in this proceeding, amounts ordered to be paid as civil money 
penalties pursuant to this Order shall be treated as penalties paid to the government for all purposes, 
including all tax purposes.  To preserve the deterrent effect of the civil penalty, Respondent agrees 
that in any Related Investor Action, he shall not argue that he is entitled to, nor shall he benefit by, 
offset or reduction of any award of compensatory damages by the amount of any part of 
Respondent’s payment of a civil penalty in this action ("Penalty Offset").  If the court in any Related 
Investor Action grants such a Penalty Offset, Respondent agrees that he shall, within 30 days after 
entry of a final order granting the Penalty Offset, notify the Commission's counsel in this action and 
pay the amount of the Penalty Offset to the Securities and Exchange Commission.  Such a payment 
shall not be deemed an additional civil penalty and shall not be deemed to change the amount of the 
civil penalty imposed in this proceeding.  For purposes of this paragraph, a "Related Investor 
Action" means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the Commission 
in this proceeding. 
G. Gallivan shall comply with the undertaking enumerated in Section III.13., above. 
V. 
It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and admitted by 
Gallivan, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 
amounts due by Gallivan under this Order or any other judgment, order, consent order, decree or 
settlement agreement entered in connection with this proceeding, is a debt for the violation by 
Gallivan of the federal securities laws or any regulation or order issued under such laws, as set forth 
in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). 
By the Commission. 
 
Vanessa A. Countryman 
Secretary 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES ACT OF 1933 

Release No. 11085 / July 28, 2022 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 95389 / July 28, 2022 

 

INVESTMENT ADVISERS ACT OF 1940 

Release No. 6075 / July 28, 2022 

 

INVESTMENT COMPANY ACT OF 1940 

Release No. 34655 / July 28, 2022 
 

ADMINISTRATIVE PROCEEDING 

File No. 3-20939 

 

ORDER INSTITUTING ADMINISTRATIVE AND 

CEASE-AND-DESIST PROCEEDINGS 

PURSUANT TO SECTION 8A OF THE 

SECURITIES ACT OF 1933, SECTION 15(b) OF 

THE SECURITIES EXCHANGE ACT OF 1934, 

SECTION 203(f) OF THE INVESTMENT 

ADVISERS ACT OF 1940, AND SECTION 9(b) OF 

THE INVESTMENT COMPANY ACT OF 1940, 

MAKING FINDINGS, AND IMPOSING 

REMEDIAL SANCTIONS AND A CEASE-AND-

DESIST ORDER 

I. 

The Securities and Exchange Commission (the “Commission” or “SEC”) deems it 

appropriate and in the public interest that public administrative and cease-and-desist proceedings 

be, and hereby are, instituted pursuant to Section 8A of the Securities Act of 1933 (“Securities 

Act”), Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”), Section 203(f) of 

the Investment Advisers Act of 1940 (“Advisers Act”), and Section 9(b) of the Investment 

Company Act of 1940 (“Investment Company Act”), against Paul F. Gallivan (“Gallivan” or 

“Respondent”). 

II. 

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”), which the Commission has determined to accept. Solely for the 

purposes of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the 

findings herein, except as to the Commission’s jurisdiction over him and the subject matter of 

these proceedings, which are admitted, and except as provided herein in Section V., Respondent 

consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings 

Pursuant to Section 8A of the Securities Act of 1933, Section 15(b) of the Securities Exchange Act 

of 1934, Section 203(f) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment 

 

In the Matter of 

 

PAUL F. GALLIVAN, 

 

Respondent.  

 

 



 

 

2 

 

 

 

Company Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-

Desist Order (“Order”), as set forth below. 

III. 

On the basis of this Order and the Offer, the Commission finds1 that: 

SUMMARY 

1. These proceedings arise from unsuitable recommendations and misrepresentations to 

certain retail customers by Paul F. Gallivan in connection with sales of highly-complex, variable 

interest rate structured products (“VRSPs”).  

Respondent 

2. Gallivan, 49, is a resident of Del Ray Beach, Florida.  Gallivan has been a registered 

representative since 2010 and an investment adviser representative since 2015.  Gallivan was associated with 

Aegis Capital Corp., a registered broker-dealer and investment adviser, from August 2017 to September 2020.   

He holds FINRA Series 7, 63, and 66 licenses.  

Gallivan Made Unsuitable Recommendations of VRSPs  

3.   Registered Representatives (“RRs”) have a fundamental responsibility to deal fairly 

with their customers.  This responsibility of fair dealing requires that prior to recommending a 

security to a customer, RRs must make a determination that a particular investment is suitable for 

that customer in light of the customer’s investment objectives, as determined by the customer’s 

financial needs and financial condition, which include, among other things, risk tolerance, age, 

investment experience, and/or investment time horizons.  See Steven E. Muth and Richard J. Rouse, 

Exchange Act Rel. No. 52551, at *18 (Oct. 3, 2005) (Comm. Op.).  RRs who make unsuitable 

recommendations may violate the anti-fraud provisions of the federal securities laws, including 

Securities Act Sections 17(a)(2) and 17(a)(3). 

4. From October 2017 through December 2018, Gallivan made unsuitable 

recommendations of VRSPs to four customers.  Most of the customers 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 customers also were 

unwilling to risk losing their entire invested principal from their investments, and they relied on 

periodic interest payments from their investments to meet their income needs.   

5. In recommending VRSPs to the customers, Gallivan described the securities as being 

similar to “bank bonds.”  However, the VRSPs differed from traditional bonds issued by financial 

institutions in several important ways.  First, unlike traditional bonds, which provide periodic fixed-

interest payments that are directly linked to a bond issuer’s ability to make periodic payments and 

                                                           

1 The findings herein are made pursuant to Respondent’s Offer and are not binding on any other person or entity in this 

proceeding or any other proceedings.  



 

 

3 

 

 

 

which repay principal at maturity, the VRSPs offer variable interest payments based on formulas 

tied to differences in Constant Maturity Swap (“CMS”) rates for longer term and shorter term United 

States Treasury obligations, as well as to the performance of reference assets, such as certain equity 

indexes.   

6. The VRSPs initially pay fixed introductory or “teaser” rates for one to five years.  

After the introductory period, additional interest payments are not guaranteed and are contingent on 

the performance and interplay of the VRSPs derivative components such as the CMS rates and 

underlying reference indexes.  These characteristics contribute to their unsuitability for the customers, 

who relied on periodic interest payments from their investments to meet their income needs. 

7. In addition, most of the VRSPs sold to the customers have maturity periods of fifteen 

years or more and typically lack active secondary markets, with no assurance of liquidity.  These 

characteristics contribute to their unsuitability for the customers, who had investment time horizons of 

less than fifteen years and moderate or higher liquidity needs.    

8. Also unlike traditional bonds, the VRSPs are “principal-at-risk” securities, which means 

that the customers can lose some or all of their invested principal at maturity if the VRSPs’ respective 

reference assets fail to perform within pre-determined ranges at maturity.   As several preliminary 

prospectuses for the VRSPs expressly warn:  “There is no minimum payment at maturity.  Accordingly, 

investors may lose up to their entire initial investment in the securities.” This characteristic contributes 

to their unsuitability for the customers, who were unwilling to risk losing their entire invested principal 

from their investments. 

Gallivan Made Misrepresentations about the VRSPs to Customers   

9. Gallivan made misrepresentations about the risks and characteristics of the VRSPs.  

Gallivan’s material misrepresentations to customers include a: 

a) May 2018 email, in which Gallivan wrote to a customer, “You will see that your 

actual “[sic] par amount is 154,000.  This is the amount that the issuers will be paying 

you if they call the bonds in early or if we hold them to their final maturity dates.  All 

of your bonds are callable at par/100 cents on the dollar.”; and 

b) May 2018 email, in which Gallivan wrote to another customer, “you will see your 

actual par-amount-$102k.  This is what your bond are worth if the[y] are called in 

earlier by the issuer or if they are held to their finally [sic] maturity date.”   

10. Each of Gallivan’s foregoing statements was materially false and misleading. 

Gallivan knew or reasonably should have known at the time that he made these statements that 

VRSPs are not principal protected.  

11. By the foregoing conduct, Gallivan willfully violated Securities Act Sections 17(a)(2) 

and 17(a)(3).  

 



 

 

4 

 

 

 

12. The disgorgement and prejudgment interest ordered in Section IV.E. below is 

consistent with equitable principles and does not exceed Respondent’s net profits from its violations 

and will be distributed to harmed investors, if feasible.  The Commission will hold funds paid 

pursuant to Section IV.E. in an account at the United States Treasury pending a decision whether the 

Commission in its discretion will seek to distribute funds.  If a distribution is determined feasible 

and the Commission makes a distribution, upon approval of the distribution final accounting by the 

Commission, any amounts remaining that are infeasible to return to investors, and any amounts 

returned to the Commission in the future that are infeasible to return to investors, may be transferred 

to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange Act.   

Undertaking 

 13. Gallivan has undertaken to provide the Commission, within thirty days after the end of 

the twelve-month suspension period described below, an affidavit attesting that he has complied fully 

with the sanctions described in Sections IV.B. through IV.D., below. 

IV. 

In view of the foregoing, the Commission deems it appropriate and in the public interest to 

impose the sanctions agreed to in Gallivan’s Offer. 

Accordingly, pursuant to Section 8A of the Securities Act, Section 15(b) of the Exchange Act, 

Section 203(f) of the Advisers Act, and Section 9(b) of the Investment Company Act it is hereby 

ORDERED that: 

A. Gallivan shall cease and desist from committing or causing any violations and any 

future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act; 

B. Gallivan be, and hereby is, suspended from association with any broker, dealer, 

investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally 

recognized statistical rating organization for twelve months, effective on the second Monday 

following the entry of this Order.  

C. Gallivan be, and hereby is, suspended from participating, directly or indirectly, in 

any offering of a penny stock, including:  acting directly or indirectly as a promoter, finder, 

consultant, agent or other person who engages in activities with another broker, dealer or issuer for 

purpose of the issuance or trading in any penny stock, or inducing or attempting to induce the 

purchase or sale of any penny stock for a period of twelve months, effective on the second Monday 

following the entry of this Order.   

D. Gallivan is prohibited from serving or acting as an employee, officer, director, 

member of an advisory board, investment adviser or depositor of, or principal underwriter for, a 

registered investment company or affiliated person of such investment adviser, depositor, or 

principal underwriter for a period of twelve months, effective on the second Monday following the 

entry of this Order. 



 

 

5 

 

 

 

E. Gallivan shall pay disgorgement of $26,807, prejudgment interest of $3,166, and a 

civil money penalty in the amount of $25,000 to the SEC.  Payment shall be made in the following 

installments:   

1. $15,000 within 10 days of the entry of the Order; and 

2. $15,000 within 90 days of the entry of the Order; and 

3. $15,000 within 180 days of the entry of the Order; and 

4. final payment within 270 days of the entry of the Order (see below). 

Payments shall be applied first to post-order interest, which accrues pursuant to SEC Rule 

of Practice 600 and 31 U.S.C. § 3717.  Prior to making the final payment set forth herein, 

Respondent shall contact the staff of the Commission for the amount due.  If Respondent fails to 

make any payment by the date agreed and/or in the amount agreed according to the schedule set 

forth above, all outstanding payments under this Order, including post-order interest, minus any 

payments made, shall become due and payable immediately at the discretion of the staff of the 

Commission without further application to the Commission. 

Payments must be made in one of the following ways: 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request; 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United States 

postal money order, made payable to the “Securities and Exchange 

Commission (for transfer to the general fund of United States Treasury in 

accordance with Exchange Act Section 21F(g)(3))” and hand-delivered or 

mailed to: 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169. 

A payment made by check or money order must be accompanied by a cover letter identifying Paul F. 

Gallivan as Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to Yuri B. Zelinsky, Assistant Director, Division 

of Enforcement, Securities and Exchange Commission, 100 F Street, N.E., Washington, DC 20549-

5041. 

 



 

 

6 

 

 

 

F. Regardless of whether the Commission in its discretion orders the creation of a Fair 

Fund for the penalties ordered in this proceeding, amounts ordered to be paid as civil money 

penalties pursuant to this Order shall be treated as penalties paid to the government for all purposes, 

including all tax purposes.  To preserve the deterrent effect of the civil penalty, Respondent agrees 

that in any Related Investor Action, he shall not argue that he is entitled to, nor shall he benefit by, 

offset or reduction of any award of compensatory damages by the amount of any part of 

Respondent’s payment of a civil penalty in this action ("Penalty Offset").  If the court in any Related 

Investor Action grants such a Penalty Offset, Respondent agrees that he shall, within 30 days after 

entry of a final order granting the Penalty Offset, notify the Commission's counsel in this action and 

pay the amount of the Penalty Offset to the Securities and Exchange Commission.  Such a payment 

shall not be deemed an additional civil penalty and shall not be deemed to change the amount of the 

civil penalty imposed in this proceeding.  For purposes of this paragraph, a "Related Investor 

Action" means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the Commission 

in this proceeding. 

G. Gallivan shall comply with the undertaking enumerated in Section III.13., above. 

V. 

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and admitted by 

Gallivan, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 

amounts due by Gallivan under this Order or any other judgment, order, consent order, decree or 

settlement agreement entered in connection with this proceeding, is a debt for the violation by 

Gallivan of the federal securities laws or any regulation or order issued under such laws, as set forth 

in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19). 

By the Commission. 

 
Vanessa A. Countryman 

Secretary