“There is a tide in the affairs of men, Which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures.” – William Shakespeare, Julius Caesar.
As Shakespeare beautifully articulates, acting at opportune moments propels forward momentum. For investors, these moments often pertain to financial decisions. However, these decisions’ outcomes can go awry due to unprofessional financial advisors. Financial Advisor Dawn Bennet’s clients learned this in a distinctly unpleasant way. Bennet, a former advisor at Western International Securities, was sentenced to 20 years in prison. She was found guilty on 17 counts of securities fraud, wire fraud, and bank fraud (FINRA CRM#: 1567051).
The Allegation’s Seriousness and Impact on Investors
- Dawn Bennett’s Ponzi Scheme: Bennet used promissory notes to raise over $20 million from at least 46 investors in her company, DJBennett.com. These funds were not used as promised, which significantly impacted the investors financially and emotionally.
- Anthony “Tony” Liddle’s Fraudulent Scheme: In yet another shocking case, former Western rep, Anthony Liddle allegedly stole $1.9 million from clients. Liddle controlled Prosper Wealth Management, which served as the conduit for these fraudulent activities. His clients, many of whom were senior citizens, allegedly fell victim to this scheme, suffering substantial financial losses.
- Misconduct of Clement Chichester and Brittney Jade Sias: This couple, registered representatives with Western International Securities, allegedly sold annuities to an elderly, retired public-school teacher, only to liquidate those policies for their personal gain. This misconduct resulted in a significant financial setback for the elderly victim.
And that’s not all. Western International Securities reportedly agreed to FINRA sanctions for alleged supervisory failures leading to potentially excessive and unsuitable trading, causing huge economic losses to their clients.
Financial Advisor’s Background and Past Complaints
Bennett’s background in the financial sector was impressive, which helped her win investor trust. Her alleged acts of fraud show a grave violation of that trust.
On the other hand, Anthony Liddle’s fraudulent maneuvers were a severe breach of his duty toward his clients. Rather than acting in his clients’ best interests, he stole from them, leading to his barring by FINRA.
Clement Chichester and his wife, Brittney Jade Sias, used their positions for selfish gain. This brazen act not only led to an elderly woman’s financial suffering but also severely affected their professional reputations.
Understanding FINRA Rule 2111 in Simple Terms
In these scenarios, FINRA Rule 2111 comes into play. This rule mandates broker-dealers to have a reasonable basis to believe that a transaction or investment strategy involving a security or securities is suitable for the customer. This judgment is based upon information obtained through reasonable diligence by the member or associated person to understand the customer’s investment profile. The rule’s violation can lead to severe penalties, including suspensions, fines, and restitutions.
Consequences and Lessons Learned
Failure to adhere strictly to financial regulations has severe consequences. Western International Securities has been fined multiple times for non-compliance. In these instances, it paid fines totaling up to $1.2 million and restitutions over $1.5 million.
These violations underline the importance of vigilant research before investing, even when working with professionals reputed to be experts. One disturbing fact by CNBC underscores this: over two-thirds of all advisor misconduct is concentrated in 10% of advisory firms.
Navigating the complexities of the finance market requires vigilance, patience, and the ability to make informed decisions. As we have seen, accurate information can often be the difference between a prosperous future and a direct route to devastating financial losses.
