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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22026 / July 1, 2011

Securities and Exchange Commission v. Michael L. Rothenberg, et al., Civil Action Number 1:11-CV-1803-JOF (N.D. GA.)

The Securities and Exchange Commission (“Commission”) announced that on July 1, 2011, the Honorable J. Owen Forrester, United States District Judge for the Northern District of Georgia, entered an order permanently enjoining Michael L. Rothenberg (“Rothenberg”) and Four Five, LLC (“Four Five”) (collectively “Defendants”). The order restrained and enjoined Defendants from violating of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Exchange Act of 1934 (“Exchange Act”). Defendants were also ordered to pay disgorgement, pre-judgment interest and a civil penalty in amounts to be resolved upon motion of the Commission at a later date, and directed that for purposes of that motion, the allegations of the Commission’s Complaint shall be deemed true. Defendants consented to the entry of the order without admitting or denying the allegations of the Commission’s Complaint.

The Commission’s complaint, filed on June 2, 2011, alleges that between at least February 2010 and March 2010, Rothenberg, through Four Five, used misrepresentations and omissions of material fact to induce investors to participate in a secret and allegedly risk-free trading platform or trading facility. This trading platform or trading facility purportedly involved transactions among international banks that would generate substantial return on a recurring basis. Specifically, Rothenberg represented that the trading platform would produce returns in excess of 300% every fourteen days. Rothenberg and Four Five also represented to investors, both orally and in writing, that the majority of their funds would remain at all times in Rothenberg’s attorney trust account, and that all funds invested, along with the profits, would be returned to the investors at the conclusion of the trades. Rothenberg further represented to the investors that the investment was risk-free because their funds would remain in his attorney trust account. Contrary to Defendants’ representations, a risk-free trading process providing the returns promised by Defendants does not exist. Moreover, contrary to Rothenberg’s representations that investor funds would remain in his attorney trust account, Rothenberg began disbursing investor funds within days of receipt of those funds. Between March 2010 and October 2010, at least $210,000 in investor funds were transferred to a bank account designated for contributions to Rothenberg’s judicial election campaign. Rothenberg used another $190,000 of investor funds for personal expenses. Although Rothenberg ultimately returned approximately $910,000 to investors, Defendants have misappropriated at least $800,000 of investor funds.

See also L.R.-21985

 

 

http://www.sec.gov/litigation/litreleases/2011/lr22026.htm


Modified: 07/01/2011