Welcome to Financial Advisor IQ
Follow

SEC Goes After Radio Star Broker … Yet Again

By Alex Padalka August 30, 2017

A year after being barred by the SEC, radio host and broker Dawn Bennett is again in the regulator’s crosshairs.

The SEC alleges Bennett made fraudulent sales of convertible and promissory notes in a firm she founded and owned, DJB Holdings, according to the regulator’s complaint. From December 2014 through July 2017 or later, Bennett allegedly raised over $20 million from at least 46 investors through the sale of the notes by misleading them about the firm’s finances, the notes’ risk and the intended use for the money, according to the regulator.

She then used the proceeds to pay back earlier investors as well as to buy herself jewelry, clothing, the services of mystics and a $500,000 annual lease on a suite at a stadium in Dallas, the SEC says.

Bennett also allegedly lied to her employer at the time as well as to a regulator about the notes, according to the SEC’s complaint. She also allegedly promised her employer not to peddle the notes to its clients but did so anyway and then hid the fact from the firm, the regulator says.

(Getty)

Many of the clients who bought the notes were elderly or unsophisticated investors and some of them plunged their entire life savings into the product, according to the SEC. Bennett also allegedly obtained loans to perpetrate her scheme by forging her brokerage statements to inflate the value of her holdings, the regulator says.

Last July, an SEC administrative judge barred Bennett from the industry and ordered her to pay $4 million in penalties and disgorgements over allegedly exaggerating her company’s assets under management to lure investors.