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Richard J. Lambert was named by Best Lawyers® as a 2021 Corporate Law “Lawyer of the Year.”

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Football underdog “Rudy” Ruettiger settles lawsuit with SEC

His can-do spirit inspired a legion of Notre Dame fans and a Hollywood movie, but Daniel Ruettiger, also known as “Rudy,” has since disappointed stockholders and inspired the Securities and Exchange Commission to file a federal lawsuit against him for a “pump and dump” stock scheme. The commercial litigation resulted in a nearly $400,000 settlement.

Several years after gaining fame as a scrappy college student who was allowed to play in the closing seconds of a University of Notre Dame football game as his teammates chanted his name, Ruettiger created a sports drink named “Rudy” to compete with Gatorade. His company, Rudy Nutrition, later moved to Las Vegas, where a penny stock promoter organized a public distribution of stock in the company in 2007, according to the SEC.

The company sold modest amounts of the drink, but exaggerated its success to investors and provided false and misleading information, the lawsuit said. Reuttiger and his partners are accused of pumping and dumping, a practice in which penny stock promoters overinflate a company’s financial prospects to drive up its stock price, then dump their own shares by selling them. This causes the stock price to tank and investors to lose their money. The SEC claims Ruettiger and the other defendants grossed more than $11 million from the scheme.

Ruettiger settled the lawsuit without admitting or denying the allegations. He agreed to pay $382,866, including disgorgement of his profits, fines and interest. He’s also barred from serving as an officer or director of public companies required to file reports with the SEC, and from participating in any penny stock offerings.

It’s a disappointing chapter in the story of a man who inspired people to dream big and never give up. Perhaps we can learn another lesson from the famous underdog: Play by the rules.

Source: VegasInc.com, “Former Notre Dame walk-on ‘Rudy’ settles lawsuit with SEC,” Steve Green, Dec. 16, 2011

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