414 U.S. 926 (1973)

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U.S. Supreme Court

SENNOTT v. RODMAN & RENSHAW , 414 U.S. 926 (1973)

414 U.S. 926

Richard J. SENNOTT et ux.
No. 72 1740.

Supreme Court of the United States

October 15, 1973

On petition for writ of certiorari to the United States Court of Appeals for the Seventh Circuit.

The petition for a writ of certiorari is denied.

Mr. Justice DOUGLAS, with whom Mr. Justice BLACKMUN concurs, dissenting.

The petitioner brought this action in district court for securities fraud against Rodman & Renshaw, a registered broker dealer in securities and member firm of the New York Stock Exchange, William Rothbart, a partner in the firm, and Jordan Rothbart, William's son. After bench trial the District Court found all three defendants liable. Respondent

Page 414 U.S. 926 , 927

Rodman & Renshaw then appealed and the Court of Appeals reversed, 474 F.2d 32 (CA7 1973), finding no basis on which to hold Rodman liable for the concededly illegal and fraudulent scheme.

Both Sennott and Jordan were members of the Chicago Board of Trade, although Sennott had little experience in securities investments. They became acquainted and Jordan urged Senott to open an account at Rodman through him, saying that his father had made money for other Board of Trade members. Ultimately Sennott agreed and between 1964 and 1966 his trading volume in the accounts at Rodman was more than $2 million, 70% of which was through accounts opened by Jordan. [Footnote 1]

Unknown to Sennott during this period, Jordan's employment by Rodman had been terminated because of his questionable integrity, and he had no official connection with the firm after 1958. The Securities and Exchange Commission had held in a 1962 order that between 1955 1957 Jordan, while employed by another broker dealer, had violated various anti fraud provisions of the Securities Act. In 1958 his registration as a representative of a member of the National Association of Securities Dealers had been revoked because of deceptive practices.

In early 1964 Jordan induced Sennott to invest in a secondary offering by Skyline Homes, Inc., that Rodman was handling. Soon after Jordan encouraged him to buy additional shares of Skyline through stock options made available to William, his father, for his services in underwriting the secondary offering. Sennott ultimately invested $142,000 in these options. They did not [414 U.S. 926 , 928]

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