U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21985 / June 2, 2011
Securities and Exchange Commission v. Michael L. Rothenberg, et al., Case No. 1:11-CV-1803 (N.D. GA.)
SEC Charges Micheal L. Rothenberg and his company, Four Five, with Securities Fraud
The United States Securities and Exchange Commission (“Commission”) announced the filing of a civil injunctive action in Atlanta, Georgia on June 2, 2011, alleging that Michael L. Rothenberg (“Rothenberg”) and the company he controlled, Four Five, LLC (“Four Five”) operated a fraudulent “Prime Bank” scheme that violated the antifraud provisions of the federal securities laws.
The Commission’s complaint 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.
In its Complaint, the Commission alleges that Rothenberg and Four Five Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.