The SEC has charged Mike Rothenberg with fraud - Josh Loe

The SEC has charged Mike Rothenberg with fraud


Mike Rothenberg, infamous Silicon Valley venture capitalist and founder of Rothenberg Ventures, has been formally charged by the Securities and Exchange Commission for overcharging investors to fund personal projects.

It’s important to note a formal charge is not proof of guilt and Rothenberg has not made any admission of guilt under these proceedings. However, Rothenberg has been under investigation by the SEC for the last several years.

The SEC now alleges in a statement the investor and his firm had misappropriated up to $7 million dollars for personal enjoyment, meanwhile claiming the funds were from his own coffers to pay for lavish parties, hotels and sporting events.

Rothenberg has settled the charges with the SEC and tells TechCrunch through a statement from his communications team that he is stepping down.

“Mr. Rothenberg takes great pride in the portfolio of innovative start-up companies he has selected for investors. But he has determined it would best serve his investors to bring this matter to a close, and has thus decided to resolve the SEC action without admitting or denying the allegations. Separately, Rothenberg Ventures today filed suit against Silicon Valley Bank to vindicate the interests of its funds and investors,” says the statement.

As part of the settlement, Rothenberg has agreed to be barred from the brokerage and investment advisory business with a right to reapply after five years.

We’ve reached out to several LPs in the fund and have found, regardless of the charges or several news reports surrounding possible misdeeds, Rothenberg still seems to have loyalty among some whom he would have harmed.

“I wanted to help hold the ship together, not only for the sake of the investments but because Mike was in desperate need of help and it was hard to see someone abandoned like that, even if he had messed up somehow,” investor Nathan N. Hudson told TechCrunch in a statement.

You may recall our series of initial reports on the rise and fall of Rothenberg Ventures starting in 2016, including a mass exodus at the firm by not only top brass but most of the employees, former employee’s claims of overspending on hot-ticket items such as an executive-produced video for Coldplay, a race-car and driver and an alleged $200,000 suite at the Super Bowl meant to woo investors.

Rothenberg was later caught up in several lawsuits, including one from Transcend VR for fraud and breach of contract, which ended in a settlement. Another suit between Rothenberg and his former CFO, David Haase, ended with Rothenberg being ordered to pay $166,000 in damages.

Through it all, Rothenberg has still managed to make some good investment picks, which have supposedly helped keep him afloat during the government inquiry. According to one investor in the fund, Rothenberg’s $100,000 Robinhood investment is now worth $20 million.

“Venture capital investors provide important funding for start-ups but there are risks, including potential harm to investors from unscrupulous managers who defraud them, as we allege Rothenberg did in this case,” C. Dabney O’Riordan, co-chief of the Enforcement Division’s Asset Management Unit said in a statement.

Rothenberg has made no admission of any wrongdoing throughout the settlement and could practice in investing after five years are up with a clean record. The SEC stands by their allegations.





Source link