Recovery of Investment Losses with Dawn Bennett
Former investment adviser Dawn Bennett must pay nearly $4 million for inflating assets and exaggerating investment returns in radio advertisements for her firm, according to the Securities and Exchange Commission.
The SEC’s March 30 opinion clears the way for Bennett to move forward with her federal court claims that the agency’s in-house forum is unconstitutional.
As we told you last summer, the SEC barred Bennett and fined her and her firm, Bennett Financial Group $4.1 million for allegedly “grossly inflating” the assets she and her firm managed . The former broker and advisor, who continues to broadcast her weekly self-sponsored Financial Myth Busting programs, allegedly lied to SEC examiners during their investigation and, according to the ruling by Administrative Law Judge James E. Grimes, is untrustworthy and unfit to serve as a financial advisor.
Bennett, a former top-ranked Barron’s advisor, appealed the ruling within the SEC’s administrative proceedings even as she seeks to overturn the ruling through appeals in the federal court system. She claims the administrative law judge decisions are unconstitutional because the judges are not appointed by the SEC’s commissioners.
Bennett filed her internal appeal in August, which stayed the necessity to pay the fine, and has been waiting for a response from the Commission.
The federal appeals courts are divided on the constitutional question. The U.S. Court of Appeals for the Tenth Circuit concluded in a case against Colorado businessman David Bandimere that the way the agency’s administrative law judges are hired violates the Appointments Clause. A D.C. Circuit panel, in a case against investment adviser Raymond J. Lucia, disagreed. However, the full D.C. Circuit has agreed to reconsider the issue.
The district court denied Bennett’s bid to halt the administrative case pending resolution of the constitutional question and she appealed to the U.S. Court of Appeals for the Fourth Circuit.
In December, the Fourth Circuit, joining the Second, Seventh, Eleventh and D.C. Circuits, said that Bennett couldn’t bring her constitutional challenge until the administrative proceedings against her had ended.
In a separate case, Bennett is also fighting FINRA’s claims that she failed to comply with an investigation into whether she used $6 million raised from investors for a retail clothing company for her personal benefit.
Failure to Supervise Dawn Bennett
The White Law Group represents several of Dawn Bennett clients and continues to investigate the liability that her FINRA registered employer, Western International Securities, may have for failure to properly supervise her.
Those claims generally allege breach of fiduciary duty, negligent supervision, and unsuitability and relate to high-risk bets on gold and gold investments.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit https://www.whitesecuritieslaw.com. For a free consultation with a securities attorney, please call the firm at 888-637-5510.