Also named as defendants are Jack Herstein, assistant director of the Bureau of Securities, Rodney Griess, supervisor of the Investigation and Compliance Unit, and Jackie Walter, securities examiner.
In the lawsuit, filed Monday, June 13, Bennie said his business, Bob Bennie Wealth Management, lost millions of dollars in assets under management from December 2010 to the spring of 2011 after the state banking department launched a review of his business without due process.
On December 17, without notice, a hearing, or explanation, the banking department demanded Bennie cease all advertising and solicitation of new clients during the review.
“The department’s blatant disregard for my constitutional rights is alarming and sets a dangerous precedent,” said Bennie, president and CEO of Bob Bennie Wealth Management and Nebraska tea party supporter. “I pride myself on operating my business with integrity and have an outstanding record of service. In essence, they shut me down without due process, an action that not only resulted in a loss of some existing clients, but new client business, which is a majority of my income.”
Bennie believes his politics prompted the probe, which was launched after a February 2010 Lincoln Journal Star article on the Nebraska tea party movement where Bennie was quoted extensively about the tea party and where he criticized both major political parties and several political figures.
After operating for nearly 16 years as a financial advisor in Nebraska with a spotless record, Bennie said for the first time in his career the banking department contacted him shortly after the article ran and asked about a television commercial that had aired for five months but hadn’t aired for more than a month before the inquiry. In that commercial, Bennie touted Second Amendment rights and offered $100 toward the purchase of a firearm to new clients. The commercial was completely legal and approved by LPL Financial, the brokerage firm with which he was affiliated at the time. A week later, the department called Bennie about an invitation he had sent on behalf of an insurance company for a financial planning workshop – an invitation that had been approved by the federal securities market regulator FINRA.
When Bennie changed brokerage firms from LPL Financial to Prospera Financial Services in December, the banking department put conditions on his registration with the new firm, restricting him from advertising or soliciting new clients. The Department took these actions without any contact with Bennie and without any type of notice or hearing – a clear violation of his basic constitutional rights.
LPL abruptly terminated its relationship with Bennie after one of his clients filed a class-action lawsuit against LPL, claiming to have been mislead about an annuities investment. According to Bennie, LPL’s action was related to its anticipated Initial Public Offering and its desire to separate from Bennie prior to that event. That lawsuit was quickly dismissed by a judge in August, only weeks after its filing.
To clear his name, Bennie ordered an independent third-party audit of his firm, which verified that Bennie had not acted improperly during his association with LPL. The banking department refused to review the results of the independent audit.
“At no point during this review was I allowed to be heard,” said Bennie. “I’ve been in this business a long time and have never seen anyone in my profession treated like this.”
In February, after Bennie made complaints to the Governor’s Office, the Nebraska Attorney General, and the state banking department, the department lifted one restriction and a month later, lifted all restrictions. This was after a March 9 on-site audit at Bob Bennie Wealth Management by the banking department that found no basis for the restrictions on his business. Despite dropping the formal investigation on March 14, the banking department persisted with harassing inquiries and numerous demands for records and information unrelated to the initial review through April, said Bennie.
Lincoln State Sen. Tony Fulton recently sent a letter to the Legislature's Banking, Commerce and Insurance Committee chair, Rich Pahls, to make him aware of Bennie's concerns. Fulton told the Journal Star, “The Department of Banking has some explaining to do.”
Bennie is represented by Steve Grasz, an attorney with Husch Blackwell LLP law firm in Omaha, Neb., and former Chief Deputy Attorney General for the State of Nebraska. He served in the attorney general’s office from 1991 to 2002.
Bennie has been registered as a broker agent and investment advisor with the Nebraska Department of Banking and Finance since 1995. He’s a Certified Financial Planner (CFP), and holds a masters degree in Business Administration from Kansas State University and a Bachelor of Science degree from the University of Nebraska-Lincoln. In 2009, Mr. Bennie was named one of the top 1,000 Financial Planners in the United States by Barron’s Magazine. He is a past board member of the Financial Planning Association of Nebraska, and is a nationally recognized presenter of hundreds of educational workshops to both investment professionals and the public.
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