Dawn Bennett, a former star adviser who was thrown out of the securities industry, has
lost a $1 million Finra arbitration claim for making unsuitable investment recommendations for one of her clients.
The plaintiff, Steven Santagati, is to receive $746,000 as part of the award. Ms. Bennett was alleged to have recommended that Mr. Santagati invest in a gold exchange traded fund.
"People of her ilk use the fact that people like me don't understand the financial details," he said Wednesday in an interview. "She was leveraging my account and investing in high risk investments, like the gold ETF."
Also named as respondents in the award were her former broker dealer, Western International Securities Inc. and her firm, Bennett Group Financial Services. The claim was filed in 2014 in the Financial Industry Regulatory Authority Inc.'s Office of Dispute Resolution.
According to the arbitration award, Mr. Santagati also alleged breach of fiduciary duty, failure to supervise and negligence in his claim. The causes of action related to Mr. Santagati's investment in the SPDR Gold Shares exchange traded fund, according to the award.
The award said the respondents are "jointly and severally liable for violations of [Florida statutes] including, but not limited to, recommending unsuitable investments and failure to supervise." In addition to the Mr. Santagati's award, they were ordered to pay $252,000 in attorney fees and $27,000 in expert witness fees.
Ms. Bennett has six other pending arbitration claims against her,
according to her profile on BrokerCheck.
The Securities and Exchange Commission in July 2016 barred Ms. Bennett for violations that included material misrepresentations about the amount of assets managed by her financial advice firm. Finra in November filed a complaint against Ms. Bennett for
failing to testify in its investigation of possible fraud tied to her clothing company.
Ms. Bennett's attorney in the matter, David E. Robbins, did not return a call on Wednesday afternoon to comment. Donald Bizub, the CEO of Western International Securities, also did not return a phone call.
