SEC Judge Fines Radio-Show Advisor Dawn Bennett $4.1 Mln
A Securities and Exchange Commission judge on Monday fined financial advisor Dawn Bennett and her Washington, DC-based advisory firm more than $4 million and barred her from the industry for life for inflating her firm’s investment record and assets under management.
The stiff penalty, which includes a civil penalty of $2.9 million against Bennett Group Financial Services, a $600,000 fine against Bennett personally and disgorgement to clients of $556,102, matches what SEC enforcement attorneys sought when they in September 2015.
“Her behavior and bald-faced lies made during the Commission’s examination and investigation further demonstrate her untrustworthiness and unfitness,” Administrative Law Judge James E. Grimes wrote in a 48-page decision.
Bennett, who has 21 days to appeal the decision, put out a press release in January announcing her boycott of the fraud hearing, arguing it was an “unconstitutional administrative proceeding” because administrative law judges are not appointed by the SEC’s commissioners.
Gregory Morvillo, Bennett’s lawyer, did not immediately respond to a request for comment.
Bennett, an independent broker and adviser for over 30 years, inflated her assets to over $2 billion dollars when in reality she managed no more than $407 million, SEC lawyers said. She also falsely characterized her registered investment advisor firm’s investment record as among the “top 1% in the world,” according to the decision.
Bennett flaunted her alleged record before Barron’s, earning her top marks in the publication’s annual rankings of top advisors between 2009 and 2011. She also repeatedly made the false claims on her self-sponsored syndicated radio show, “Financial Myth Busting,” .
The decision cited testimony from several clients who were seduced by her claims. Phillips Peter, a Washington lawyer, testified that he invested $25.9 million with her in 2009. By 2011, the value of the account had dropped to $8.3 million. (He transferred his money to UBS Financial Services in early 2012, according to the decision.)
“Her numerous false statements regarding AUM and portfolio performance to attract new customers and retain existing ones caused investors to falsely place their trust in her and resulted in large losses,” Judge Grimes wrote.
Bennett attempt to have the SEC’s case dismissed by a federal court was turned down for lack of jurisdiction. Her appeal of that decision is still pending, according to the ALJ.