Dawn Bennett Ordered to Pay Investor $1 Million over Gold Recommendation
A Financial Industry Regulatory Authority arbitration panel has ordered barred financial advisor Dawn Bennett to pay an investor more than $1 million for unsuitably recommending the SPDR Gold Shares exchange traded fund, according to an award document posted on Wednesday.
Bennett, her registered investment advisory firm, Bennett Group Financial Services, and independent broker-dealer Western International Securities were held jointly and severally liable for claims made by Steve Santagati, a dating advice author who said he spends most of his time in Miami. The award includes $763,740 in damages for the unsuitable investment recommendation and failure to supervise, plus $26,620 in expert witness fees and $252,034 in attorney’s fees.
“What I understand she did is the equivalent of throwing it all on black in Vegas,” said Santagati, who said he invested his entire savings with Bennett after meeting her in 2006. “She just kept telling me I was going to make my money back, but it was dropping by hundreds of thousands.”
Santagati received most of the $850,000 in damages sought in his initial complaint in February 2014. The case extended over 15 sessions between February 2015 and 2017, costing the respondents another $17,250 of Santagati’s hearing costs, according to the award.
A person answering the phone at Bennett Group said she was not available and declined to comment on the award or on other allegations Santagati made in an interview. A spokeswoman at Western International, which “permitted” Bennett to resign in November 2015, did not respond to a request for comment.
Bennett was barred in July by the Securities and Exchange Commission and fined $4.1 million for inflating her RIA’s assets under management and exaggerating investment performance. She has appealed that decision.
Bennett boycotted the SEC’s requests for testimony and filed a federal lawsuit alleging that the agency’s use of administrative law judges is unconstitutional. A panel of judges in Virginia denied the appeal in December. Her lawyer, David Robbins of Kaufmann Gildin & Robbins in New York, did not respond to a request for comment on the Santagati decision.
In addition to the Santagati case, Bennett has six customer complaints pending for unsuitable investments and misrepresentation, according to her BrokerCheck report. The largest, filed in January 2016, is seeking $499,999 for unsuitability.
Santagati, who describes himself as a real estate investor and author of self-help books on dating, characterized Bennett’s behavior at arbitration sessions he attended as “childish.” During his lawyer’s closing arguments, she yelled, “that’s a lie,” he said. While facing Santagati’s lawyer during a deposition, she inched a binder and papers across the table in an attempt to knock over the lawyer’s water and coffee, he said.
Santagati’s lawyer, John B. Veach III in Asheville, N.C., did not respond to a call for comment.
As for his own investments, Santagati now has a self-directed investment account with Charles Schwab.