U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22490 / September 24, 2012
SEC v. David L. Rothman, Civil Action No. 12-cv-5412-BMS (E.D. Pa. Sept. 21, 2012)
SEC CHARGES REGISTERED REPRESENTATIVE WITH FRAUD FOR ISSUING FALSE ACCOUNT STATEMENTS AND MISAPPROPRIATING INVESTOR FUNDS
The Securities and Exchange Commission announced that on Friday, September 21, 2012, it filed an injunctive action in the United States District Court for the Eastern District of Pennsylvania against David L. Rothman of Richboro, PA, a registered representative, Vice President, and minority owner of Rothman Securities, Inc., a registered broker-dealer, for conducting a fraud by issuing false account statements and misappropriating investor funds.
The Commission alleges that from 2006 to 2011, Rothman created and issued false account statements to certain elderly and unsophisticated investors that materially overstated the value of their investment accounts. The Commission's Complaint further alleges that when the investors discovered that Rothman had misrepresented the value of their investments, Rothman engaged in a scheme to conceal his fraudulent conduct by agreeing to pay those investors the investment returns he reported on the false account statements. When Rothman could no longer afford to make those payments, he misappropriated funds from another elderly and unsophisticated investor and from two trust accounts for which he serves as trustee. Rothman also used a substantial portion of the misappropriated funds for his personal benefit.
As a result of the conduct described in the Complaint, the Commission alleges that Rothman violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Complaint seeks a permanent injunction, disgorgement together with prejudgment interest, and civil penalties from Rothman. Criminal charges have also been filed against Rothman in a parallel criminal case.
The Commission thanks the United States Attorney for the Eastern District of Pennsylvania and the Federal Bureau of Investigation for their assistance in this matter.
The Commission's investigation is continuing.