Initial Decision Release No. 1371

Administrative Proceeding

File No. 3-17828

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

In the Matter of

Rosalind Herman

Initial Decision

April 5, 2019

Appearances: Kathleen Burdette Shields

for the Division of Enforcement,

Securities and Exchange Commission

Rosalind Herman, pro se

Before: James E. Grimes, Administrative Law Judge

Summary

I grant the Division of Enforcement’s motion for summary disposition.

Respondent Rosalind Herman is barred from associating with an investment 

adviser, broker, dealer, municipal securities dealer, municipal advisor,

transfer agent, or nationally recognized statistical rating organization.

Procedural Background

The Securities and Exchange Commission initiated this proceeding in 

February 2017, when it issued an order instituting proceedings (OIP) under 

Section 203(f) of the Investment Advisers Act of 1940.

1 This is a follow-on 

 

1 OIP ¶ I; see 15 U.S.C. § 80b-3(f).
2

proceeding based on Herman’s 2016 conviction in the United States District 

Court for the District of Massachusetts.

2

This case was previously assigned to another administrative law judge. 

After Herman answered the OIP, the previous administrative law judge 

issued an initial decision in April 2018.

3 Two months later, the Commission 

stayed all pending cases.4 In August 2018, the Commission allowed the stay 

to lapse, vacated decisions in all pending cases, remanded all cases pending 

before it, and ordered that all pending cases be reassigned to a different 

administrative law judge from the one previously assigned.5 Following the 

Commission’s August order, this proceeding was reassigned to me.6

Following reassignment, I directed the parties to submit proposals for 

the conduct of further proceedings and to state their availability to 

participate in a telephonic prehearing conference.7 The Division submitted a 

proposal and reported that Herman had not responded to its inquiry.8 As a 

result, I adopted the Division’s proposal to set a motions schedule, under 

which motions for summary disposition were due November 19, 2018, 

oppositions were due December 19, 2018, and replies were due January 4, 

 

2 See Judgment in a Criminal Case, United States v. Herman, No. 1:12-cr10015 (D. Mass. July 27, 2016), ECF No. 299, aff’d, 848 F.3d 55 (1st Cir.), 

cert. denied, 137 S. Ct. 1603 (2017); OIP ¶ II.B.2.

3 Rosalind Herman, Initial Decision Release No. 1249, 2018 WL 1806684

(ALJ Apr. 17, 2018).

4 Pending Admin. Proc., Securities Act of 1933 Release No. 10510, 2018 

WL 3193858 (June 21, 2018).

5 Pending Admin. Proc., Securities Act Release No. 10536, 2018 WL 

4003609, at *1 (Aug. 22, 2018).

6 Rosalind Herman, Admin. Proc. Rulings Release No. 6013, 2018 SEC 

LEXIS 2393 (ALJ Sept. 18, 2018).

7 Rosalind Herman, Admin. Proc. Rulings Release No. 6047, 2018 SEC 

LEXIS 2541 (ALJ Sept. 20, 2018).

8 Rosalind Herman, Admin. Proc. Rulings Release No. 6199, 2018 SEC 

LEXIS 2852 (ALJ Oct. 16, 2018).
3

2019.9 I also directed the parties to participate in a telephonic conference that 

I scheduled for a later date.10

During the telephonic conference, I explained the procedural history of 

this proceeding to Herman, including that the previous initial decision had 

been vacated.11 I also reviewed the motions schedule that I had previously 

established.12

In a December 2018 letter, Herman asked for a two-month extension to 

file an opposition to a motion for summary disposition the Division had filed 

in November.13 Before I could act on Herman’s motion, the Commission 

experienced a five-week lapse in appropriations, which led it to stay all 

administrative proceedings until January 30, 2019.14 On February 1, 2019, I 

granted Herman’s motion and ordered that her opposition would be due 

February 19, 2019.15 Herman did not file an opposition to the Division’s 

motion.

Findings of Fact

The findings and conclusions in this initial decision are based on the 

record and on facts officially noticed under Commission Rule of Practice 323, 

17 C.F.R. § 201.323.16 In making the findings below, I have applied 

 

9 Id.

10 Id.

11 See Rosalind Herman, Admin. Proc. Rulings Release No. 6286, 2018 SEC 

LEXIS 3059 (ALJ Nov. 2, 2018).

12 See id.

13 See Rosalind Herman, Admin. Proc. Rulings Release No. 6438, 2019 SEC 

LEXIS 72, at *1 (ALJ Feb. 1, 2019).

14 See Pending Admin. Proc., Securities Act Release No. 10602, 2019 SEC 

LEXIS 5 (Jan. 16, 2019); Pending Admin. Proc., Securities Act Release No. 

10603, 2019 SEC LEXIS 37 (Jan. 30, 2019).

15 Herman, 2019 SEC LEXIS 72, at *1.

16 I take official notice of the district court’s docket in United States v. 

Herman and the orders the court issued. See 17 C.F.R. § 201.323. I also take 

official notice of Insight Onsite Financial Solutions’ final Form ADV, which is 

a public official record of the Commission. See id.; cf. Helpeo, Inc., Securities 

(continued...)
4

preponderance of the evidence as the standard of proof.17 As the Commission 

directed, in conducting this proceeding, I have given no weight to the 

opinions, orders, or rulings issued by the prior administrative law judge.18 

This case arose out of an investment fraud scheme Herman operated 

with her co-conspirator Gregg D. Caplitz. From 1994 to 2012, Herman was 

president and CEO of Insight Onsite Financial Solutions, a Commissionregistered investment adviser.19 Caplitz was the adviser’s chief compliance 

officer.20

In October 2013, Herman and Caplitz were indicted on charges including 

investment adviser fraud, wire fraud, impeding the administration of the tax 

laws, and conspiracy to commit investment adviser fraud, submit false 

statements to the Commission, commit wire fraud, and defraud the IRS.21

During Herman’s jury trial, the evidence established that Herman induced 

investment by telling investors that their money would be invested in a 

hedge fund.22 But Herman instead used investor funds for her own benefit.23

And when four investors complained and threatened to report Herman and 

Caplitz to appropriate authorities, Herman and Caplitz returned 

approximately $61,000 to them.24 The jury found Herman guilty of single

counts of conspiracy, investment adviser fraud, and impeding the 

administration of the tax laws, and four counts of wire fraud.25

 

Exchange Act of 1934 Release No. 82551, 2018 WL 487320, at *4 n.37 (Jan. 

19, 2018) (taking official notice under Rule 323 of EDGAR filings).

17 See John Francis D’Acquisto, Advisers Act Release No. 1696, 1998 WL 

34300389, at *2 (Jan. 21, 1998).

18 See Pending Admin. Proc., 2018 WL 4003609, at *1.

19 Div. Ex. K at 1, 5.

20 Id. at 5.

21 Div. Ex. D. 

22 Div. Ex. E. at 2.

23 Id.

24 Id. at 3.

25 Div. Ex. C at 1–2; see 15 U.S.C. § 80b-6(1) (investment adviser fraud); 18 

U.S.C. §§ 371 (conspiracy), 1343 (wire fraud); 26 U.S.C. § 7212(a) (impeding 

administration of internal revenue laws).
5

During Herman’s sentencing hearing, the district court increased 

Herman’s offense level because her offense involved vulnerable victims and 

substantial hardship to at least five people and because she was an 

investment adviser when her misconduct occurred.26 The court also heard 

from Herman’s victims.27 Victim evidence presented during sentencing 

revealed that Herman’s adviser fraud victims included a 75-year-old veteran 

who lost $500,000 that he had saved so that he could live comfortably in 

retirement.28 Further victim evidence indicated that other victims included a 

cancer patient who has since died, a paralyzed woman, and a man with 

dementia residing in a nursing home.29

The district court offered Herman the opportunity to address the court at 

the conclusion of her sentencing hearing.30 Herman initially said she was 

“extremely sorry,” before blaming Caplitz and saying she “had no idea he was 

stealing money and forging people’s signatures,” and adding, “I cannot 

believe and I am horrified by his ruthless and heartless acts.”31 Herman 

concluded by saying, “I have lost everything I worked 35-plus years for and I 

hope everyone believes how sorry I am for what Mr. Caplitz did.”32

Immediately following Herman’s statement, the district court sentenced 

her to seven years’ imprisonment and ordered her to pay over $1.8 million in 

restitution.33 That figure included nearly $500,000 to the IRS.34 Nearly all of 

the balance was to be paid to individuals.35 The district court then addressed 

Herman, saying that she was “in denial,” and that she “knew what was going 

 

26 Div. Ex. J at 15–16.

27 Id. at 6–13.

28 Id. at 8–9.

29 Id. at 12.

30 Id. at 28–29.

31 Id. at 29.

32 Id.

33 Id. at 30–31.

34 Div. Ex. C at 7.

35 Id. at 6–7.
6

on was criminal from the get-go, and ... knew that [she was] stealing people’s 

money, for years and years.”36

Conclusions of Law

Under Rule 250(b), which governs summary disposition in 75-day cases, 

an administrative law judge may grant a motion for summary disposition if 

“there is no genuine issue with regard to any material fact and . . . the 

movant is entitled to summary disposition as a matter of law.”37 The 

Commission has repeatedly upheld use of summary disposition in cases such 

as this one, where the respondent has been enjoined or convicted and the sole 

determination concerns the appropriate sanction.38

Herman’s conviction and the record of her criminal proceeding before the 

district court establish facts that cannot be challenged in this proceeding.39

There is therefore sufficient evidence to decide this matter in the Division’s 

favor. Although Herman requested a new hearing,40 she has not 

substantively participated in this iteration of the proceeding. And the denials 

and defenses in her answer filed in October 2017 impermissibly challenge her 

criminal conviction.41

The Advisers Act gives the Commission authority to impose a collateral 

bar42 against Herman if, as is relevant here, (1) she was associated with or 

 

36 Div. Ex. J at 32.

37 17 C.F.R. § 201.250(b).

38 Gary M. Kornman, Exchange Act Release No. 59403, 2009 WL 367635, 

at *10 (Feb. 13, 2009), pet. denied, 592 F.3d 173 (D.C. Cir. 2010); Jeffrey L. 

Gibson, Exchange Act Release No. 57266, 2008 WL 294717, at *5 & n.21 

(Feb. 4, 2008) (collecting cases), pet. denied, 561 F.3d 548 (6th Cir. 2009).

39 See Kornman, 2009 WL 367635, at *8; James E. Franklin, Exchange Act 

Release No. 56649, 2007 WL 2974200, at *4 & nn. 13–14 (Oct. 12, 2007).

40 Herman, 2018 SEC LEXIS 2393.

41 See Answer at 1–2; see also David R. Wulf, Exchange Act Release No. 

77411, 2016 WL 1085661, at *5 & n.22 (Mar. 21, 2016) (explaining that a 

respondent in a follow-on proceeding cannot “contest the basis for [her] 

conviction”). 

42 A collateral bar, also referred to as an industry bar, is a bar that 

prevents an individual from participating in the securities industry in 

capacities in addition to those in which the person was participating at the 

(continued...)
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seeking to become associated with an investment adviser at the time of the 

misconduct at issue; (2) she was convicted within the ten years preceding 

issuance of the OIP of an offense involving a violation of 18 U.S.C. § 1343 

(wire fraud); and (3) imposing a bar is in the public interest.43 

Herman’s conviction for investment adviser fraud and the Commission’s

investment adviser registration records establish that she was associated 

with an investment adviser at the time of her misconduct.44 This satisfies the 

first factor. 

Less than ten years before the OIP was issued, Herman was convicted of 

four counts of wire fraud, in violation of 18 U.S.C. § 1343. This satisfies the 

second factor.45

Determining whether imposing a collateral bar would be in the public 

interest requires weighing the public-interest factors discussed in Steadman 

v. SEC.

46 These include: 

the egregiousness of the respondent’s actions, the 

isolated or recurrent nature of the infraction, the degree 

 

time of his or her misconduct. See Toby G. Scammell, Advisers Act Release 

No. 3961, 2014 WL 5493265, at *1 & n.1 (Oct. 29, 2014). 

43 15 U.S.C. § 80b-3(e)(2)(A), (B), (D), (3)(A), (f).

44 Div. Ex. C at 1–2 (conviction for investment adviser fraud); see Div. Ex. 

G at 99–100 (jury instructions stating that the jury would have to find 

Herman was associated with an investment adviser to convict her of a 

violation of the Advisers Act). See also Form ADV, Insight Onsite Financial 

Solutions, Signature Page, https://adviserinfo.sec.gov/IAPD/content/viewform

/adv112010/Sections/iapd_AdvSignatureSection.aspx?ORG_PK=107651&FL

NG_PK=00DB9CB400080156051DA9700327B60D056C8CC0 (last visited 

Apr. 2, 2019) (Herman signed Insight Onsite’s final Form ADV in March 2011 

as president and CEO); Div. Ex. E at 2 (noting that the misconduct occurred 

from 2008 to 2013).

45 The second factor is also satisfied because Herman’s conviction (1) 

involves the purchase or sale of securities, (2) arises out of the conduct of the 

business of an investment adviser, and (3) “is punishable by imprisonment 

for 1 or more years.” 15 U.S.C. § 80b-3(e)(2)(A), (B), (3)(A), (f).

46 603 F.2d 1126, 1140 (5th Cir. 1979), aff’d on other grounds, 450 U.S. 91 

(1981); see Kornman, 2009 WL 367635, at *6.
8

of scienter involved, the sincerity of the respondent’s 

assurances against future violations, the respondent’s 

recognition of the wrongful nature of his conduct, and 

the likelihood that the respondent’s occupation will 

present opportunities for future violations.47

The Commission also considers the deterrent effect of administrative 

sanctions.48 The public interest inquiry is “flexible” and “no one factor is 

dispositive.”49 

Before imposing a collateral bar, an administrative law judge must 

determine, based on the evidence presented, whether a bar “is necessary or 

appropriate to protect investors and markets.”50 I must therefore “‘review 

[Herman’s] case on its own facts’ to make findings regarding [her] fitness to 

participate in the industry in the barred capacities.”51 A decision to impose a 

collateral bar “should be grounded in specific ‘findings regarding the 

protective interests to be served’ by barring the respondent and the ‘risk of 

future misconduct.’”

52 

Turning to the Steadman public-interest factors, Herman’s conduct was 

egregious. The Commission has held that “[t]he securities industry presents 

continual opportunities for dishonesty and abuse, and depends heavily on the 

 

47 Wulf, 2016 WL 1085661, at *4.

48 Id. General deterrence is relevant but not determinative of whether the 

public interest weighs in favor of imposing a collateral bar. See Peter Siris, 

Advisers Act Release No. 3736, 2013 WL 6528874, at *11 n.72 (Dec. 12, 2013), 

pet. denied, 773 F.3d 89 (D.C. Cir. 2014). 

49 Conrad P. Seghers, Advisers Act Release No. 2656, 2007 WL 2790633, at 

*4 (Sept. 26, 2007), pet. denied, 548 F.3d 129 (D.C. Cir. 2008).

50 Ross Mandell, Exchange Act Release No. 71668, 2014 WL 907416, at *2 

(Mar. 7, 2014) (internal quotation marks omitted), vacated in part on other 

grounds, Exchange Act Release No. 77935, 2016 WL 3030883 (May 26, 2016). 

51 Id. (quoting McCarthy v. SEC, 406 F.3d 179, 188 (2d Cir. 2005)). 

52 Id. (quoting McCarthy, 406 F.3d at 189–90); see also John W. Lawton, 

Advisers Act Release No. 3513, 2012 WL 6208750, at *9 (Dec. 13, 2012) 

(“[T]he Commission must consider not only past misconduct, but the broader 

question of the future risk the respondent poses to investors.”), vacated in 

part on other grounds, Advisers Act Release No. 4402, 2016 WL 3030847 

(May 27, 2016).
9

integrity of its participants and on investors’ confidence.”53 This is especially 

so for investment advisers, in whom clients must be able to put their trust.54

Given this fact and the fact that investment advisers are fiduciaries who owe 

their clients “an affirmative duty of ‘utmost good faith and full and fair 

disclosure of all material facts,’” the Commission consistently takes a very 

dim view of investment advisers and associated persons who defraud their 

clients.55

Herman abused her position of trust by stealing over $1.3 million of her 

clients’ money.56 At sentencing, the district court increased her offense level 

because she knew or should have known that her victims were vulnerable.

57

As discussed, one of Herman’s victims was a veteran who lost money he had 

saved his entire life so that he could live comfortably in retirement. Herman’s 

conduct easily qualifies as egregious.58

Herman’s conduct was not isolated and it was recurrent. She stole from 

at least 18 victims as part of a scheme that lasted almost five years.59

As to scienter, which encompasses an “intent to deceive, manipulate, or 

defraud,”60 the district court instructed the jury that in order to find Herman 

guilty of investment adviser fraud, the jurors had to find that she acted 

“knowingly, knowing ... what she was doing[;] willfully, heedless of the 

 

53 Seghers, 2007 WL 2790633, at *7.

54 Schield Mgmt. Co., Advisers Act Release No. 2477, 2006 WL 231642, at 

*10 n.56 (Jan. 31, 2006).

55 James C. Dawson, Advisers Act Release No. 3057, 2010 WL 2886183, at 

*3 (July 23, 2010); see id. at *4 (“[W]e have consistently viewed misconduct 

involving a breach of fiduciary duty or dishonest conduct on the part of a 

fiduciary, such as the fraud committed by Dawson on his clients, as 

egregious.”).

56 Div. Ex. E at 2.

57 Div. Ex. J at 16.

58 See Alfred Clay Ludlum, III, Advisers Act Release No. 3628, 2013 WL 

3479060, at *4 (July 11, 2013) (involving $852,000 taken from investment 

advisory clients).

59 See Div. Ex. E at 2; Div. Ex. C at 6–7.

60 Aaron v. SEC, 446 U.S. 680, 686 n.5 (1980).
10

consequences, with the ... intent to deceive, manipulate, or defraud.”61 To 

find Herman guilty of wire fraud, the jury was instructed that it had to find 

that she knowingly or willfully engaged in a scheme or artifice to defraud.62

And to find her guilty of conspiracy to commit investment adviser fraud and 

wire fraud, the jury had to find that she entered into the conspiracy 

specifically intending to bring about those frauds.63 The fact that the jury 

found her guilty of investment adviser fraud, wire fraud, and conspiracy to 

commit those frauds establishes that Herman acted with scienter.64

Herman has neither made assurances against future misconduct nor 

demonstrated that she understands or recognizes the wrongfulness of her

criminal acts. To the contrary, during her sentencing hearing, she essentially 

proclaimed her innocence and blamed Caplitz for everything. And the district 

court rebuked her for being in denial. Herman’s denial of responsibility shows 

that she does not understand the wrongfulness of her actions. 

Herman’s failure to accept responsibility or show that she understands 

the wrongfulness of her actions raises the risk that she would engage in 

future misconduct if allowed to remain in the securities industry. Indeed, the 

fact of Herman’s past misconduct raises an inference that if given the chance, 

she will cause additional harm to the investing public.65 This determination 

is supported by my finding that Herman’s conduct was egregious.66 

 

61 Div. Ex. G at 99.

62 Id. at 101.

63 Id. at 104–05.

64 See United States v. Pierce, 224 F.3d 158, 165 (2d Cir. 2000) (holding that 

scienter is an element of wire fraud); SEC v. Steadman, 967 F.2d 636, 641 & 

n.3 (D.C. Cir. 1992) (holding that scienter is an element of adviser fraud 

under Advisers Act Section 206(1)).

65 See Tzemach David Netzer Korem, Exchange Act Release No. 70044, 

2013 WL 3864511, at *6 n.50 (July 26, 2013).

66 Geiger v. SEC, 363 F.3d 481, 489 (D.C. Cir. 2004) (holding that a finding 

of egregiousness “justifies the inference” that misconduct will recur); 

Warwick Capital Mgmt., Inc., Advisers Act Release No. 2694, 2008 WL 

149127, at *11 (Jan. 16, 2008) (“The existence of a violation raises an 

inference that the violation will be repeated, and where the misconduct 

resulting in the violation is egregious, the inference is justified.”).
11

Finally, imposing a collateral bar will serve the Commission’s interest in 

deterring others from engaging in similar misconduct. 

I find that it is in the public interest to impose a collateral bar against 

Herman. 

Order

The Division of Enforcement’s motion for summary disposition is 

GRANTED. 

Under Section 203(f) of the Investment Advisers Act of 1940, Rosalind 

Herman is BARRED from associating with an investment adviser, broker, 

dealer, municipal securities dealer, municipal advisor, transfer agent, or 

nationally recognized statistical rating organization.

This initial decision will become effective in accordance with and subject 

to the provisions of Rule 360.67 Under that rule, a party may file a petition for 

review of this initial decision within twenty-one days after service of the 

initial decision. A party may also file a motion to correct a manifest error of 

fact within ten days of the initial decision, pursuant to Rule 111.68 If a motion 

to correct a manifest error of fact is filed by a party, then a party shall have 

twenty-one days to file a petition for review from the date of the 

undersigned’s order resolving such motion to correct a manifest error of fact.

The initial decision will not become final until the Commission enters an 

order of finality. The Commission will enter an order of finality unless a 

party files a petition for review or motion to correct a manifest error of fact or 

the Commission determines on its own initiative to review the initial decision 

as to a party. If any of these events occurs, the initial decision shall not 

become final as to that party.

_______________________________

James E. Grimes

Administrative Law Judge

 

67 See 17 C.F.R. § 201.360. 

68 See 17 C.F.R. § 201.111.