Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Paul Mccabe (Mccabe), previously associated with Olympus Securities, LLC, has at least one disclosable event. These events include one tax lien, alleging that Mccabe recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 17, 2025.
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted against Paul John McCabe, Jr. (“McCabe”) and PMAC Consulting, LLC (“PMAC,” and collectively with McCabe, “Respondents”). In anticipation of the institution of these proceedings, Respondents have submitted an Offer of Settlement which the Commission has determined to accept. The Commission finds that These proceedings arise out of unregistered broker activity by McCabe, conducted through his solely-owned entity, PMAC. Until October 2016, McCabe was a registered representative associated with broker-dealers registered with the Commission. In December 2016, McCabe consented to a permanent bar by the Financial Industry Regulatory Authority (“FINRA”) from acting as a broker or otherwise associating with a registered broker-dealer. From October 2016 through June 2023, McCabe continued to broker securities transactions between holders of shares of stock in private companies that were expected to go public through an initial public offering (“Pre-IPO Shares”) and funds seeking to acquire such Pre-IPO Shares. Between October 2018 and June 2023, McCabe received more than $16 million in transaction-based compensation through PMAC for unregistered broker activity on behalf of several fund clients and nearly 100 sellers. McCabe and PMAC acted as unregistered brokers in violation of Section 15(a) of the Exchange Act in connection with these securities transactions.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Data on the investor and the expense of the advice are consistently part of material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, rather than depending solely on the issuer for company information, a brokerage firm should conduct its own reasonable investigation.
Another protective measure for investors is the requirement for brokers to disclose. Brokers are required to disclose reportable events such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters on FINRA’s BrokerCheck reports for public viewing. FINRA has recognized that recent studies indicate future regulatory and customer complaint issues can be predicted for brokers who have experienced them before. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Mccabe has been in the securities industry for more than 8 years. Mccabe has been registered as a Broker with Olympus Securities, LLC since 2015.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
