Sennott v. Rodman & Renshaw

Facts

Jordan Rothbart had been an employee of Rodman & Renshaw. No express authority to act on behalf of that firm existed. In 1962, the Securities and Exchange Commission had held that Jordan had between 1955 and 1957, while employed by another broker-dealer, violated certain anti-fraud provisions of the Securities Act. Jordan became a member of the Chicago Board of Trade in 1960 and became acquainted with Richard Sennott who was also an active trader. They met to open a trading account with Rodman in the name of his son, Sennott’s wife. In 1964, Sennott placed orders and delivered checks to Jordan for Skyline stock. Payments for these orders totaled $142,000. No stock options of the type described by Jordan ever existed and the representations were obviously designed to defraud Sennott. Instead of depositing the payments in an escrow account, Jordan placed each check in his wife’s personal checking account and subsequently used the money to pay his own trading losses. Jordan was expelled from the Board of Trade in 1966 for refusing to turn his financial records over to the Business Conduct Committee. The parties disagree over whether William Rothbart knowingly assisted and participated in the efforts of Jordan Rothbart to defraud plaintiffs.