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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 15170 / December 2, 1996
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL W. REHTORIK AND
MITCHELL S. ROSENTHAL
Civil Action No. 0394CV-0306G, USDC/ND TX [Dallas Division]
On July 7, 1995, the United States District Court for the
Northern District of Texas granted defendant Mitchell S.
Rosenthal's motion for summary judgment, and directed entry of a
final judgment in his favor. The Commission had charged
Rosenthal and co-defendant Michael W. Rehtorik with violations of
Sections 7 and 10(b) of the Securities Exchange Act of 1934, and
Rule 10b-5 thereunder, and Section 3 of Federal Reserve Board
Regulation X. The Complaint alleged that Rosenthal and Rehtorik
engaged in a "free-riding" scheme involving the securities of
Pantheon Industries, Inc., a corporation registered under Section
12(g) of the Exchange Act. Rehtorik allegedly placed orders to
purchase Pantheon securities through Rosenthal, his broker, and
dishonored purchase orders for approximately $4.7 million;
Rosenthal allegedly knew that Rehtorik did not have the financial
capability to honor these purchase orders when he placed them.
Rehtorik consented to the entry of a Final Judgment on
December 30, 1994, which permanently enjoined him from future
violations of the federal securities laws. Rosenthal filed a
motion with the Court on June 14, 1994, stating that he was
entitled to summary judgment on the claims alleged in the
Commission's complaint. The Court granted Rosenthal's motion,
ruling that Rosenthal was not a "customer" or "borrower" as those
terms are defined by Regulations T or X of the Federal Reserve
Board and that Rosenthal did not illegally benefit from his
relationship with Rehtorik.
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