SEC Charges Broker with Inflating Assets and Exaggerating Returns
Dawn J. Bennett, founder of Bennett Group Financial Services in Washington D.C. and host of the radio show, “Financial Myth Busting,” has been busted by the Securities and Exchange Commission (SEC). The reason? She allegedly inflated her firm’s assets under management by as much as five times the actual amount, and exaggerating investment returns.
Inflated Assets Under Management
The SEC says that Bennett claimed to have more than $2 billion in assets, but the most money that Bennett Group ever managed was $407 million.
In addition, the SEC complaint says that Bennett lauded the firm’s highly profitable investment returns. She allegedly claimed that the returns put Bennett Group in the “top 1 percent” of firms in the world.
However, these purported returns were lifted from a model portfolio and are not representative of any actual customer returns, according to the SEC complaint.
The material misstatements and omissions made by Bennett’s firm took place between 2009 and February, 2011, when the then fledging investment advisory business was hoping to attract new clients by luring them with claims of industry success and impressive investment returns.
The SEC also claims that Bennett made additional misstatements to the agency to conceal their previous fraud.
Bennett Group’s misstatements worked. According to the SEC, they landed Bennett on Barron’s list of “Top 100 Women Financial Advisors,” and she was second on the “2011 Top Advisors” in Washington, D.C. list.
Of course, the firm used those falsely achieved rankings to market itself to customers.
Bennett is currently registered with Western International Securities where they operate under the Bennett Group name.
However, Bennett Group is no longer registered with the SEC. In its last Form ADV, the firm claims to have $1.6 million in assets under management.
Speaking to the serious nature of Bennett’s false claims, Sharon Binger, director of the SEC’s Philadelphia Regional Office said, “The investing public is entitled to a level of confidence that information they receive about brokerage and advisory services is accurate, and this case shows that so-called financial experts on the radio are often merely advertisers who may not be doing so truthfully.”
The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.
Source: Investment News