BROKER SETTLES ALLEGED MISREPRESENTATION/FUNDS MISAPPROPRIATIONS CASE

FROM:  SECURITIES AND EXCHANGE COMMISSION 

Court Enters Final Judgment Against Broker in Settlement of Claims Arising from Fraudulent Misrepresentations and the Misappropriation of Funds

The Securities and Exchange Commission announced today that, pursuant to a settlement agreement, the Honorable Berle M. Schiller of the United States District Court for the Eastern District of Pennsylvania entered a final judgment on January 29, 2014 against defendant David L. Rothman in the Commission action, SEC v. David L. Rothman, Civil Action No. 2:12-cv-05412 (E.D. Pa.). The final judgment permanently enjoins Rothman from violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933. Rothman was ordered to pay disgorgement in the amount of $505,431. Rothman consented to the entry of the final judgment against him.

The SEC charged Rothman, a registered representative, who was the Vice President and minority owner of Rothman Securities, Inc., located in Southampton, Pennsylvania, which is a mutual fund retailer and municipal securities broker, with creating and issuing false account statements to certain elderly and unsophisticated investor/clients that materially overstated the value of their investment accounts. The Commission's Complaint further charged that when the investors discovered that Rothman had misrepresented the value of their investments, he 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/client and from two trust accounts for which he served as trustee. Rothman used a substantial portion of the misappropriated funds for his personal benefit.

The SEC's litigation was conducted by Nuriye C. Uygur and G. Jeffrey Boujoukos of the Philadelphia Regional Office. The SEC's investigation was conducted by enforcement staff Kingdon Kase and Jennifer F. Miller. The matter was referred to the enforcement staff by the Philadelphia Regional Office's Office of Compliance, Inspections and Examinations.