Dawn Bennett, of Washington, District of Columbia, a stockbroker formerly associated with Western International Securities, has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that Bennett failed to cooperate in a FINRA investigation into allegations that she potentially engaged in unauthorized private securities transactions or selling away, committed fraud, and converted funds. Department of Enforcement v. Bennett, No. 2015047682402 (Nov. 9, 2016).
According to the Complaint, since November of 2015, Bennett has been investigated by FINRA for engaging in unauthorized private securities transactions, committing fraud, and converting funds. Particularly, while Bennett was associated with Western International Securities, Inc., she reportedly operated a holding company, DJBH, which owned DJBennett.com – a clothing entity. Apparently, in 2015, $6,000,000.00 worth of DJBH promissory notes or convertible notes were solicited by Bennett and eventually sold to an estimated thirty investors. These notes, which DJBennett.com apparently guaranteed repayment on, were sold to Bennett’s senior customers at Western International Securities.
The Complaint stated that the thirty customers’ funds were possibly misappropriated by Bennett, and subject to her fraud. FINRA further examined whether Bennett’s conduct constituted unauthorized private securities transactions and outside business activities.
The Complaint stated that Bennett was sent several requests by FINRA, per Rule 8210, from November of 2015 to February of 2016, in which Bennett never responded. Bennett was eventually suspended by FINRA after failing to comply with requests for information and documentation, such as financial and bank records belonging to DJBH and Bennett.
The Complaint additionally stated that FINRA’s Hearing Panel informed Bennett that she would be barred from associating with any FINRA member in any capacity if she did not provide FINRA’s requested information and documentation by August 16, 2016. By such time, Bennett’s counsel apparently provided FINRA with such information.
The Complaint noted that FINRA made additional requests in September of 2016 that Bennett provide information and documentation pertaining to the investigation into her potential misconduct; however, Bennett never provided such. Bennett also apparently failed to provide recorded testimony before FINRA personnel despite four requests for such testimony made by FINRA between April and September of 2016. FINRA alleged that Bennett’s failure to cooperate in the investigation constituted violations of FINRA Rules 2010 and 8210.
FINRA Public Disclosure reveals that Bennett has been subject to twelve customer arbitrations. Particularly, on February 27, 2013, a customer was awarded $200,000.00 in damages per an investment related arbitration claim involving Bennett’s conduct, in which the customer alleged that Bennett effected unsuitable transactions in the customer’s account. On March 21, 2013, a customer initiated investment related arbitration claim involving Bennett’s conduct was settled for $100,000.00 in damages based upon allegations against Bennett including misrepresentation, fraud, churning, breach of contract, unsuitability.
Additionally, on April 4, 2014, a customer filed an investment related arbitration action involving Bennett’s conduct, in which the customer requested $850,000.00 in damages based upon allegations against Bennet including breach of fiduciary duty, and negligence. On March 24, 2015, another customer filed an investment related arbitration claim involving Bennett’s actions, in which the customer alleged that Bennett made misrepresentations to the customer concerning investments.
Further, on July 14, 2015, a customer investment related arbitration claim involving Bennett’s actions was settled for $15,801.15 in damages, based upon allegations that Bennett failed to diversify the customer’s investment portfolio. On November 21, 2016, a customer initiated an investment related arbitration action involving Bennett’s conduct, in which the customer requested $499,999.00 in damages based upon allegations that Bennett effected unsuitable transactions in the customer’s account. On February 1, 2016, another customer filed an investment related arbitration claim involving Bennett’s conduct, in which the customer requested $99,999.00 in damages based upon similar allegations.
Three additional customer initiated investment related arbitration claims involving Bennett’s conduct were filed between May 16, 2016 and August 18, 2016, in which customers have collectively requested $474,000.00 in damages based upon allegations that Bennett effected unsuitable transactions in the customer’s account.
Disclosure records reveal that on November 24, 2016, Western International Securities, Inc. permitted Bennett to resign based upon allegations that Bennett sold unauthorized promissory notes to customers of the firm.
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