By George C. Miller, Esq.  of Shustak Reynolds & Partners, P.C. posted on Monday, July 11, 2016.

George C. Miller

Partner

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 105)
Direct: (619) 501-8270
Email: [email protected]

Last fall, the SEC initiated disciplinary proceedings against financial advisor and self-proclaimed “Financial Myth Buster” Dawn Bennett, accusing her of publicly inflating her client assets under management (or “AUM”) and exaggerating her investment returns. 

According to the SEC, from at least 2009 to February 2011, Bennett and her firm made multiple misstatements and omissions regarding their AUM and account performance, hoping to attract new, high-net-worth clients.  Among other things, Bennett allegedly claimed her firm, Bennett Group Financial Services, based in Washington, D.C., had more than $2 billion in client assets under management and client returns in the “top 1%” of firms worldwide.  In reality, however, the SEC contends Bennett and her firm never managed more than $407 million in client assets, and the “top 1%” claim was based on a model portfolio and not representative of her client accounts’ actual performance.  Bennett’s false claims led her to be named as one of the Barron’s “top 100 advisors” three times, the SEC alleged.  Most recently, in 2011, Barron’s listed Bennett as the No. 2 advisor in the United States. 

After losing a challenge in federal court, where Bennett claimed she should not be compelled to appear before the SEC’s administrative forum, Bennett failed to appear at her February 2016 hearing before the SEC’s administrative law department.  While other advisors and industry experts have criticized the forum, Bennett’s failure to appear at her own hearing all but guarantees the judge will agree with the SEC’s request to bar Bennett from the securities industry.  A decision is expected any day now in Barron’s case, but if the SEC’s “win rate” in this type of proceeding is any indication, Bennett will be permanently barred from the industry and may face substantial monetary penalties.  While Bennett maintains the SEC “did not charge that customers of [her firm] lost money due to any misconduct on the part of Ms. Bennett or [her firm],” her publicly-available Brokercheck Report shows five pending customer disputes against her, involving allegations of misrepresentation and unsuitability and hundreds of thousands of dollars in claimed damages. 

Shustak Reynolds & Partners, P.C.’s San Diego FINRA and SEC attorneys have extensive experience representing high-net-worth investors, registered representatives and investment advisors in a variety of securities-industry matters, including FINRA and SEC inquiries and enforcement proceedings.  Contact us today for a confidential consultation. 

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