Just a few years ago, Silicon Valley venture capitalist Michael Rothenberg was on top of the world — almost literally.
The startup financier, still in his early 30s, was hosting clients at the Super Bowl, booking the San Francisco Giants’ baseball stadium for all-day events, and flying the favored few over Napa Valley vineyards in hot-air balloons.
Rothenberg, only a few years out of Harvard Business School, was an early-stage investor in new-wave fintech companies like Robinhood. He had attracted more than 200 people to invest in his funds. Bloomberg News ran a feature on him, calling him “The Valley’s Party Animal.”
Today, he’s reeling from a $31 million judgment in California federal court to settle allegations of fraud and misappropriation with the Securities and Exchange Commission. He must repay $18.8 million that he took from clients, plus nearly $3.7 million in interest and another $9 million as a civil penalty, the court ruled.
As part of the agreement, he neither denied nor admitted wrongdoing. The current charges were in civil court only; the SEC does not handle criminal charges. Rothenberg, now 36, has also been barred from the securities and brokerage industry for a minimum of five years.
MarketWatch could not immediately reach Rothenberg or the SEC for comment.
Rothenberg has compared himself to Jay Gatsby, the flashy bootlegger in F. Scott Fitzgerald’s celebrated novel. The SEC says he financed his Gatsbyesque existence by tapping freely into his clients’ money. His Instagram account handle is @VirtualGatsby:
The venture capitalist diverted $3.8 million of clients’ money into his own pocket, $8.8 million into his private businesses, and $5.7 million to cover costs at his venture-capital firm, the SEC alleged. It also says that he continued to misappropriate funds even as he was negotiating with the commission to settle its initial