Washington, D.C.--(Newsfile Corp. - January 17, 2025) - The Securities and Exchange Commission today announced that Paul John McCabe Jr. and his unregistered firm PMAC Consulting LLC have agreed to pay $3 million to resolve SEC charges for illegally brokering transactions involving the stock of private companies that were expected to undertake an initial public offering (IPO).
According to the SEC’s order, McCabe consented to a permanent bar from broker activity by the Financial Industry Regulatory Authority (FINRA) in late 2016 after he refused to provide documents and information while affiliated with a registered broker-dealer being examined by FINRA. The SEC’s order finds that McCabe concurrently established PMAC Consulting and continued engaging in broker activity without registering as a broker-dealer or associating with a registered broker-dealer. The order finds that McCabe negotiated the terms of transactions for the purchase and sale of pre-IPO shares, worked directly with issuers, provided advice or valuations to purchasers, and acted as the primary intermediary between buyers, sellers, and their agents or representatives. According to the order, McCabe received more than $16 million in transaction-based compensation through PMAC on behalf of several fund clients and nearly 100 sellers.
"Broker-dealers serve a critical function in the securities markets; here, McCabe tried to circumvent the registration requirements that are in place to ensure that markets operate with transparency, fairness, and accountability," said Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office. “The SEC remains committed to those principles by vigilantly policing pre-IPO transactions and exposing unregistered participants improperly performing broker activities.”
The SEC’s order finds that McCabe, who is based in Bethesda, Maryland, and PMAC violated the broker-dealer registration provision of the federal securities laws. Without admitting or denying the findings, McCabe and PMAC agreed to industry and penny stock bars as well as joint and several civil penalties of $3 million. They also agreed to cease and desist from future violations.
The SEC’s investigation was conducted by Michael S. DiBattista, Megan R. Genet, Tian Wen, Douglas J. Smith, Sushila P. Rao, Patricia Schrage, Alistaire Bambach, Daniel Loss, and Steven G. Rawlings of the New York Regional Office. The case was supervised by Mr. Pollock. The SEC appreciates the assistance of FINRA.
Investors can read this Investor Alert to learn more about the risks of investing in pre-IPO offerings.
Source: Newsfile SEC Press Digest