FINRA

Respondent Rothman failed to respond to FINRA request for information.

Letter

Bar (Permanent)

All Capacities

Indefinite

11/28/2016

Pursuant to FINRA Rule 9552(h) and in accordance with FINRA's Notice of Suspension and Suspension from Association letters dated August 24, 2016 and September 19, 2016, respectively, on November 28, 2016, Rothman is barred from association with any FINRA member in any capacity. Respondent failed to request termination of his suspension within three months of the date of the Notice of Suspension; therefore, he is automatically barred from association with any FINRA member in any capacity.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC ADMIN RELEASE 34-73248 / SEPTEMBER 29, 2014: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AGAINST THEODORE ROTHMAN ("RESPONDENT"). IN ANTICIPATION OF THE INSTITUTION OF THESE PROCEEDINGS, RESPONDENT HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION HAS DETERMINED TO ACCEPT. SOLELY FOR THE PURPOSE OF THESE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION, OR TO WHICH THE COMMISSION IS A PARTY, RESPONDENT CONSENT TO THE COMMISSION'S JURISDICTION OVER HIM AND THE SUBJECT MATTER OF THESE PROCEEDINGS AND TO THE ENTRY OF THIS ORDER INSTITUTING ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING REMEDIAL SANCTIONS. THESE PROCEEDINGS ARISE OUT OF A FRAUD CONDUCTED BY A REGISTERED REPRESENTATIVE OF THE RESPONDENT'S FIRM, WHO WAS ALSO HIS SON. THE RESPONDENT IS THE FIRM'S FOUNDER, OWNER, PRESIDENT AND DIRECTOR. FROM 2006 THROUGH 2011, THE REGISTERED REPRESENTATIVE, RESPONDENT'S SON, ISSUED INFLATED ACCOUNT STATEMENTS TO SEVERAL INVESTORS THAT MATERIALLY OVERSTATED THE VALUE OF THEIR INVESTMENT ACCOUNTS. WHEN THE INVESTORS DISCOVERED THAT HE 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 INFLATED ACCOUNT STATEMENTS. WHEN HE COULD NO LONGER AFFORD TO MAKE THOSE PAYMENTS, HE MISAPPROPRIATED FUNDS FROM AN ELDERLY AND UNSOPHISTICATED CUSTOMER OF THE FIRM AND FROM TWO TRUST ACCOUNTS (ESTABLISHED BY FORMER CUSTOMERS BUT NOT MAINTAINED AT THE FIRM) FOR WHICH HE SERVED AS TRUSTEE, AND BORROWED FUNDS FROM THE RESPONDENT. THE REPRESENTATIVE ALSO USED A SUBSTANTIAL PORTION OF THE MISAPPROPRIATED FUNDS FOR HIS PERSONAL BENEFIT. THE RESPONDENT AND THE FIRM FAILED REASONABLY TO SUPERVISE THE REPRESENTATIVE WITH A VIEW TO PREVENTING AND DETECTING HIS VIOLATIONS OF THE FEDERAL SECURITIES LAWS.

Order

Bar (Permanent)

SEE COMMENT

9/29/2014

Civil and Administrative Penalty(ies)/Fine(s)

$40,000.00

BARRED FROM ASSOCIATION IN A SUPERVISORY CAPACITY WITH ANY BROKER, DEALER, INVESTMENT ADVISER, MUNICIPAL SECURITIES DEALER, MUNICIPAL ADVISOR, TRANSFER AGENT, OR NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION.

REPRESENTATIVE FAILED TO SUPERVISE EMPLOYEE/REPRESENTATIVE WHO ALLEDGEDLY ENGAGED IN FRAUDULENT CONDUCT DURING AN UNSPECIFIED PERIOD OF TIME (RECENT).

$500,000.00

$75,000.00

CUSTOMER ALLEGED FAILURE TO SUFFICIENTLY SUPERVISE ACCOUNT REPRESENTATIVE. NO ALLEGATIONS OF PERSONAL WRONG DOING. SETTLED WITH ALL CLAIMED WRONGDOING DENIED AND UNPROVEN.

NASD

NASD CONDUCT RULES 2110 AND 2310 AND IM-2310-2 - RESPONDENT ROTHMAN RECOMMENDED AND EFFECTED PURCHASES OF CLASS S SHARES OF A MUTUAL FUND IN CUSTOMERS ACCOUNT WITHOUT HAVING REASONABLE GROUNDS TO BELIEVE THAT SUCH RECOMMENDATIONS WERE SUITABLE BECAUSE, IN ALL INSTANCES, ONE OR MORE OF THE OTHER FUND SHARE CLASSES WAS LESS COSTLY AND/OR OTHERWISE MORE ADVANTAGEOUS TO INVESTORS.

Acceptance, Waiver & Consent(AWC)

Monetary/Fine

$45,000.00

Suspension

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, ROTHMAN CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS FINED $45,000 AND SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY FOR 30 DAYS. SUSPENSION EFFECTIVE JUNE 21, 2004 TO CLOSE OF BUSINESS JULY 20, 2004.