Administrative Law Judge Rules Against Former D.C. Financial Talker In Fraud Case
July 12, 2016 at 4:07 AM (PT)
Financial advisor and radio show host DAWN BENNETT and her firm have been found liable for fraud by an Administrative Law Judge in an action against her by the SEC. In an Initial Decision of Default, Judge JAMES E. GRIMES barred BENNETT from the securities industry and ordered her and her firm, BENNETT GROUP FINANCIAL SERVICES, LLC, to pay disgorgement of $556,102 plus interest and civil penalties of $2.9 million for the firm and $600 for BENNETT personally.
The SEC alleged that BENNETT, who bought time to air "FINANCIAL MYTH BUSTING WITH DAWN BENNETT" on SALEM News-Talk WWRC-A/WASHINGTON station starting in 2010 and later took the show into syndication via RADIO AMERICA, "grossly inflat(ed) the amount of managed assets and exaggerating the investment returns actually obtained for customers" on her paid radio show, telling listeners that "highly profitable investment returns generated by BENNETT GROUP FINANCIAL SERVICES placed it in the 'top 1 percent' of firms worldwide without disclosing that the returns were calculated for a model portfolio and not based on actual investor performance."
She was also charged with falsely claiming in three submissions to a media organization that they managed assets of $1.1 billion to $1.8 billion, resulting in her being ranked fifth in a listing of the "2011 Top Advisors" in WASHINGTON in BARRON'S; she allegedly told listeners that her firm managed assets in the $1.5 billion-$2 billion range when her actual managed assets only reached about $407 million.
BENNETT refused to participate in the hearing, arguing that the proceeding was unconstitutional because the judge's appointment violated the Appointments Clause of the Constitution. The judge noted that BENNETT and her firm's "wrongdoing is evinced, in part, by their subsequent obstructive behavior during the Division’s investigation to cover up their wrongdoing."