The law firm of Oakes & Fosher is currently investigating the possible negligence and/or misconduct of former securities broker Christopher D. Bennett. According to his publicly available FINRA BrokerCheck report, Christopher D. Bennett has been the subject of multiple customer complaints filed throughout and after his career.

Christopher D. Bennett was a Kentucky based securities broker. He worked in the securities industry for twenty-two years. He spent his entire career registered with just J.J.B. Hilliard, W.L. Lyons, LLC.

The Allegations

  • In December 2016, a customer’s daughter alleged that Christopher D. Bennett engaged in unauthorized trading and recommended unsuitable securities. This case went to arbitration, where the customer was awarded $445,000 in damages.
  • In July 2017, a representative on behalf of a customer alleged breach of fiduciary duty, unauthorized trading, violation of suitability rules, and inadequate risk assessment. This case is currently pending.
  • Also in July 2017, customers alleged that Christopher D. Bennett executed unauthorized trading and violated suitability rules. The alleged transgressions taking place between 2014 and 2016. This case was settled for $90,000 in damages.
  • In August 2017, a customer alleged that Christopher D. Bennett failed to properly diversify their portfolio. The customer also alleged that Bennett invested them in products that exposed their portfolio to significant risk. The alleged transgressions taking place between February 2011 and February 2016. This case was settled for $350,000 in damages.
  • In January 2018, a customer alleged breach of fiduciary duty, misrepresentation, and unsuitability. This case is currently pending. The customer is seeking $5 million in damages.
  • In April 2018, an attorney, on behalf of a customer, alleged that Bennett recommended unsuitable securities in her account. This case was settled for $470,000 in damages.
  • In June 2018, a customer alleged that Christopher D. Bennett breached his fiduciary duty, violated Kentucky’s Securities Act, engaged in common law fraud, breached contract, handled their account negligently, and engaged in negligent misrepresentation and omission. This case is currently pending. The customer is seeking $160,000 in damages.
  • In November 2018, a customer alleged unauthorized trading and excessive commissions. The alleged transgressions taking place between January 2014 and November 2018. This case was settled for $15,000 in damages.
  • Also in November 2018, a customer alleged Christopher D. Bennett engaged in unauthorized trading. The customer also complained about suitability issues. This case is currently pending. The customer is seeking an undisclosed amount in damages.
  • In January 2019, a customer alleged that Bennett made unauthorized trades, recommended unsuitable investments, over-concentrated their account, failed to diversify their portfolio, and churned their account. This case is currently pending. The customer is seeking $559,429 in damages.
  • In February 2019, he was officially sanctioned by FINRA. The findings in this matter state that he exercised discretion in the accounts of multiple customers without their authorization. Due to these alleged actions, he was fined $5,000 and suspended from the securities industry for fifteen business days.
  • Also in February 2019, a customer filed a claim containing multiple allegations including; violation of the Securities Act of Kentucky, breach of fiduciary duty, and unsuitable investment recommendations. This case was settled for $67,000 in damages.
  • In May 2019, customers alleged that Christopher D. Bennett recommended unsuitable securities, engaged in unauthorized trading, and excessively traded their accounts. This case is currently pending. The customer is seeking $900,000 in damages.

What Does This Mean?

Securities brokers have both a fiduciary duty and a legal obligation to act in their customer’s best interests. Christopher D. Bennett has been the subject of numerous allegations that can be very self-serving to brokers but detrimental to their customers. The three main allegations levied against him were unsuitable recommendations, churning, and unauthorized trading.

Unsuitable Recommendations

One of the main expectations of securities brokers is to conduct the necessary due diligence required to determine whether a particular security is suitable for a particular customer. This suitability is determined by factors such as the customer’s investment objectives, risk tolerance, financial situation, and liquidity needs. Some securities brokers, like Christopher D. Bennett, recommend securities to customers they know are not suited for them. This is done for a few different reasons that might include the broker purchasing securities with higher commissions, the broker purchasing high-risk securities in hopes that it will provide high returns, or just severe negligence on the part of the broker when choosing the products.

Churning

Churning is a fraudulent investment scheme perpetrated by securities brokers like Christopher D. Bennett. Churning takes place when a broker trades a customer’s account excessively in an attempt to generate more commissions for themselves. Many securities brokers feel like they can disguise this fraudulent practice as normal trading. This process is so detrimental to the customer due to the amount that it subtracts from their principal investment. When substantial amounts are taken away from the customer’s principal, it becomes almost impossible for them to actually see a profit under anything besides exceptional market conditions.

Unauthorized Trading

Securities brokers are not allowed to make trades in customer accounts without authorization from the customers. Despite this, many securities brokers, like Christopher D. Bennett, still engage in this practice. There is a process known as discretion where customers authorize their brokers to make trades on their behalf without seeking authorization for every single trade. However, sometimes securities brokers take it upon themselves to implement this process without fully explaining what it means it to their customers or getting the proper authorization to do so. This is what Christopher D. Bennett was sanctioned by FINRA for.

The Products

Most of the filed complaints containing allegations against Christopher D. Bennett revolved around investments in three different products. These were Breitburn Energy, Horsehead Holdings, and Ocwen Financial. All three products were highly unsuitable and speculative securities. Breitburn Energy was an oil and gas security that later declared bankruptcy and renamed itself Maverick Natural Resources. Horsehead Holdings was a nickel and zinc producer that was accused of foul play from its shareholders after its valued assets dropped from $1 billion to $300 million in just six months. Ocwen Financial was a mortgage provider that was sued by the Consumer Financial Protection Bureau in 2017. All three products were illiquid and highly speculative investments that were only suitable for certain investors based on the factors mentioned above. Christopher D. Bennett allegedly recommended these securities to multiple customers even though he lacked a reasonable basis to believe they were suitable for them.

Oakes & Fosher Can Help

Many people are unaware of the legal recourse available to them after losing money due to securities broker fraud or negligence. Oakes & Fosher dedicates its entire legal practice to helping investors who have lost money in this fashion. If you, or someone you know, have lost money investing with Christopher D. Bennett, please contact Oakes & Fosher for a free and private consultation