The Securities and Exchange Commission charged the founder of San Francisco-based venture capital funds and his investment advisory firm with overcharging investors to fund personal projects, including sending millions of dollars to his own virtual reality production company. The SEC’s complaint alleges that Michael Rothenberg marketed his advisory firm, Rothenberg Ventures as uniquely positioned to identify millennial entrepreneurs and invest in “frontier technology” companies.
According to SEC filings, Rothenberg’s funds had nearly 200 investors and more than $64 million in assets. The SEC’s complaint alleges that over a three-year period, Rothenberg and his firm misappropriated millions of dollars from the funds, including an estimated $7 million of excess fees, which Rothenberg used to support personal business ventures he claimed were self-funded and to pay for private parties and events at high-end resorts and Bay Area sporting arenas.
“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,” said C. Dabney O’Riordan, co-chief of the Enforcement Division’s Asset Management Unit.