SEC ALJ Bars Advisor from Securities Industry, Imposes $3.5 Million Penalty


“Dawn Bennett is wholly unfit for any role in the securities industry,” claimed the Securities and Exchange Commission’s Enforcement Division, and Administrative Law Judge James E. Grimes agreed.

In an initial decision of default, ALJ Grimes permanently barred the former financial advisor from the securities industry, and imposed $3.5 in combined civil penalties against Bennett and her firm, Bennett Group Financial Services, LLC. He also ordered Bennett and the firm to disgorge $556,102 in ill-gotten gains and imposed a cease-and-desist order regarding future violations.

The SEC charged that Bennett regularly overstated the assets under management by her Washington, D.C.-based firm by at least $1.5 billion. She made the allegedly fraudulent statements repeatedly to Barron’s magazine, on a radio show that she hosted, and in various other advertisements and communications with existing and prospective clients.

According to ALJ Grimes, Bennett sought to create the impression that she and her firm were large and successful players in the industry. She also touted the firm’s investment returns and performance during her radio program without disclosing that the claimed returns were for a Bennett Group model portfolio rather than the results of actual investor performance.

After the SEC initiated its enforcement action, Bennett filed suit in the U.S. District Court for the District of Maryland seeking to enjoin the proceedings on constitutional grounds. The district court dismissed the action for jurisdictional reasons in an opinion which is currently on appeal to the Fourth Circuit. Bennett did not appear before the administrative law judge.

ALJ Grimes readily found that the egregiousness of the conduct by Bennett and the firm justified the severe sanctions he imposed. He stated that Bennett and the firm took advantage of investors in convincing them to invest large sums based on the false impression that the respondents were responsible for billions of dollars of assets. The fact that Bennett lied “elaborately” to investigators further supported his conclusions. According to ALJ Grimes, “when confronted with her lies during investigative testimony, instead of coming clean, she doubled down and continued to lie.” He found that her behavior and "bald-faced lies" during the SEC investigation demonstrated her untrustworthiness and unfitness. In addition, the numerous violations raised an unchallenged inference that she would likely engage in similar conduct in the future.

The administrative law judge succinctly summed up his findings concerning Bennett and her business when he stated that she “is not fit to remain in the industry in any capacity.”

In the Matter of Bennett Group Financial Services, LLC, and Dawn J. Bennett, Initial Decision Release No. 1033 (July 11, 2016).

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