Ex-Investment Adviser Loses Arbitration Claim Over Gold Exchange-Traded Fund
Ex-financial adviser Dawn Bennett is on the losing end of a $1M securities arbitration claim brought by a former client who claims that she recommended he invest in a gold exchange-traded fund. Steven Santagati brought his ETF securities case to the Financial Industry Regulatory Authority. He alleged failure to supervise, breach of fiduciary duty, and negligence.
InvestmentNews reports that in an interview this week, Santagati accused Bennett of taking advantage of his lack of understanding about “financial details.” Santagati said that Bennett leveraged his account and invested in risky investments, including the SPDR Gold Shares exchange traded fund.
Finra awarded Santagati $746K. Western International Securities, which was Bennett’s ex-brokerage firm, and her Bennett Group Financial Services are additional respondents in this case. They were found “jointly and severally” liable for the violations. In addition to Santagati’s award, they must pay $27K in expert witness fees and $252K in legal fees.
The US Securities and Exchange Commission barred Bennett last year for a number of violations, including purportedly promoting inflated assets under management and investment performance figures in order to bring in rich clients. The SEC ruling contended that from at least ’09 through ’11 the former investment adviser and Bennett Group touted their AUM as ranging between $1M and $2M. The most they actually managed was $407M.
In addition to the industry bar, Bennett and her firm were ordered to pay over $4M in disgorgement and fines. Bennett was also the subject of a FINRA complaint last year when she did not testify in a probe into her clothing company.
Meantime, Bennett’s BrokerCheck record notes that there are six other arbitration claims pending against her.
Olympus Securities Owner is Barred by FINRA
James Carrazza, the owner of New Jersey broker-dealer Olympus Securities, is barred by FINRA. The action comes after he did not respond to a request to provide certain information after the regulator sent him a Wells Notice. Finra was investigating whether Carrazza violated industry rules for not reporting federal tax liens on employment records.
Olympus Securities, which had been business since 2002, shut its doors this month.
FINRA Issues Investor Alert About Binary Options Follow-Up Scams
In a recent Investor Alert, FINRA cautioned anyone taking part in binary options trading through unregistered non-US companies to watch out for follow-up scams involving binary options.
Upon expiration, binary options either results in money made or the entire investment lost. As Investor Education Sr. VP Gerry Walsh noted in the alert, if the loss is a significant sum, then an investor may become “anxious” to recover their funds. This can make a person more vulnerable to follow-up frauds, which could lead to further, more devastating losses.
Consumers on unregistered non-US trading platforms may be extra vulnerable to such scams, which typically involves the fraudster claiming to have the ability to help an investor get back their lost money—in exchange for an advance fee, that is.
IRS imposter scams may also be used. This typically involves the fraudster claiming that the investor owes taxes from binary options trading. The scammer may even threaten to bring in the government or police unless payment is issued right away. The IRS imposter even may claim to work for the government agency.
‘Myth Busting’ Ex-Broker to Pay Dating Guru $1M, ThinkAdvisor, March 23, 2017
FINRA bars owner of New Jersey Broker-Dealer, InvestmentNews, March 20, 2017