Once again, financial adviser Dawn Bennett is in the news. The Financial Industry Regulatory Authority has reportedly filed a securities case against Bennett, who is the owner of Bennett Group Financial Services, for not appearing four times to testify in the regulator’s probe into her retail clothing business, DJBennett.com. FiNRA said that her failure to appear to testify violates its rules. Bennett was recently investigated for fraud while she was an independent broker at Western International Securities.
She stepped down from that firm last year after FINRA found that she may have committed securities fraud, as well as been involved in private securities transactions, undisclosed external business activities, and the misappropriation of investor funds.
It was in 2015 that she allegedly solicited Western clients in a debt deal that her retail clothing company was supposed to guarantee. Bennett sold $6M of convertible and promissory notes to about 30 investors.
Many of her investors were senior investors. In its complaint, FINRA said there was evidence indicating that Bennett may have used investor funds to cover her own spending and other unrelated costs. According to the complaint, FINRA’s case stems from its probe of irregular monetary transfers involving Bennett’s clothing company and related bank accounts.
In July, the U.S. Securities and Exchange Commission barred Bennett from the securities industry over violations involving material misrepresentations about the assets that Bennett Group Financial Services managed. The year before, the SEC charged her with allegations that she grossly inflating her firm’s assets, as well as the investment returns of customers, even purportedly doing so on her “Financial Myth Busting” radio program. At one point Bennett touted that her firm’s assets under management at about $2B when really the figure was closer to $407M.
The regulator ordered her and her registered investment adviser to pay $4.1M in fines and disgorgement. Bennett sued the SEC contending that its administrative proceedings, presided over by an SEC judge, are unconstitutional.
FINRA’s BrokerCheck noted that there are seven open customer complaints against Bennett, with most of the claims alleging misrepresentations and unsuitable investments. The biggest open claim against Bennett is seeking $850K for breach of fiduciary duty and negligence. Last year, she settled another client’s case for $137K.
Barred Radio Host-Advisor Dawn Bennett Faces New Fraud Allegations, AdvisorHub, November 10, 2016
Another RIA/Financial Radio Show Host Charged with Securities Fraud, Stockbroker Fraud Blog, September 10, 2016