Another RIA/Financial Radio Show Host Charged with Securities Fraud

The Securities and Exchange Commission is charging Bennett Group Financial Services founder and host of the radio show “Financial Myth Busting” with allegedly inflating her investment adviser firm’s assets under management, as well as its investment returns, to try to gain more clients.

Dawn J. Bennett is accused of claiming that the Washington-based firm had over $2 billion in assets even though it never oversaw more than $407 million. She made the inflated claim multiple times on her radio show. She also purportedly said that the Bennett Group’s investment returns were among the top 1% globally. The SEC said that these bragged about returns came from a model portfolio and did not represent any real customer returns.

At one point Bennett was number five on Barron’s “Top 100 Women Financial Advisors” list and number two on the DC “2011 Top Advisors” because of her alleged misstatements. She touted these rankings to potential customers.

In the regulator’s complaint, the Commission said that from at least 2009 to early 2011 Bennett and her investment adviser firm made material misstatements and omissions to try to bring in more clients. They also allegedly made other misstatements to attempt to conceal their fraud.

Addressing the securities case, SEC Philadelphia Regional Office director Sharon Binger noted Bennett’s radio show, cautioning that sometimes supposed financial experts with their own programs might just be “advertisers” whose marketing claims may not even be truthful.

The securities fraud charges against Bennett and her firm come a month after the SEC fined a former registered investment adviser, Total Wealth Management, $2.8 million. The RIA is owned by Jacob Cooper, who also used to host his own radio show. He is now barred from the industry.

Cooper’s ex-clients call him the Main Street Madoff. He is accused of fooling investors in an allegedly fraudulent kickback scam that resulted in about $44 million in losses. A lot of them gave Cooper the discretionary authority to invest their retirement money. He purportedly placed the majority of some $100 million in assets under management with alternative investments or hedge funds under his control, while some of the money allegedly went to entities that had revenue sharing deals.

The SEC said Cooper neglected to do the needed due diligence on the investments. One of the investments was a Ponzi scam. Meantime, he was substantially compensated even as he failed to disclose his conflicts of interest to clients.

Just because someone has a radio show about investing doesn’t mean he or she is an expert. You want to make sure that you do your due diligence when choosing a financial adviser. Even someone who has the right credentials may not be who they claim. You can, however, check work histories and credentials and compliance records for brokers on the Financial Industry Regulatory Authority’s BrokerCheck, as well as do other research.

At Shepherd Smith Edwards and Kantas, LTD LLP, our securities fraud lawyers represent investors that have sustained huge losses because of investment adviser fraud.

Read the SEC Order Against Bennett (PDF)

Read the SEC Order Against Cooper and his firm (PDF)