SEC Bars Broker From Industry, Orders Her to Pay $4M for Inflating Firm’s Investment Performance to Bring In Rich Investor Clients

The Securities and Exchange Commission has barred broker Dawn J. Bennett from the securities industry. The regulator also ordered and her firm to pay over $4M in fines and disgorgement. The ruling was issued by an SEC administrative law judge.

According to the Commission, Bennett exaggerated her firm’s investment performance and assets under management so she could garner business from rich clients. Bennett is accused of promoting inflated assets to try to get high rankings on Barron’s top advisers list and using these rankings to retain new clients. She was named to that list three times as a manager who oversaw over $1B in client assets.

Bennett and her firm, Bennett Group Financial Services, purportedly claimed to be managing between $1.1B and $2B from at least ’09 through ’11 when, in reality, the firm never had more than $407M under management during that time period. The SEC, along with arbitration claims filed with FINRA, contend that at least two of her firm’s clients lost over $1M when they invested their funds with her.

The regulator held a hearing earlier this year seeking a cease-and-desist order against Bennett, in addition to a permanent ban and $4M in disgorgement and fines. She reportedly sought to combat the SEC’s case by challenging the Commission’s right to have an SEC administrative law judge, rather than a federal judge, preside over the proceedings Her argument was rejected and Bennett decided not to show up at the hearing rather than defend herself even though she had denied any wrongdoing.

The SEC’s brief after the hearing described Bennett as someone “wholly unfit” to play any part in the securities industry. Now, the Commission is ordering Bennett and her firm to pay over $4M, including a $600K penalty and $2.9M from the Bennett Group.

‘Financial Myth Buster’ To Pay $4M For Tall Tales Of Assets, Law360, July 11, 2016

The SEC’s case against Dawn J. Bennett, InvestmentNews, July 10, 2016

Another RIA/Financial Radio Show Host Charged with Securities Fraud, Stockbroker Fraud Blog, September 10, 2015