An investment adviser in Nebraska wants to arm his clients with more than just sound financial advice. He wants to arm them in the 2nd Amendment sense. Robert Ray Bennie Jr. of Lincoln, Nebraska, ran a television commercial offering to pay $100 towards the purchase of a firearm to new clients opening accounts with his firm. Bennie, a tea-party activist, has also been quoted referring to President Obama as a “communist” and a “dishonest” and “evil man.”
Bennie says he has since been subjected to “an unrelenting string of five separate investigations within a four-month period related to his public political statements or advertising” by the Nebraska Department of Banking and Finance, which Bennie claims were politically motivated. Things went south quickly for Bennie’s career. But now he’s fighting back, with a rather vicious federal lawsuit against the regulators personally.
Following the investigations, the Nebraska Department of Banking and Finance barred him from opening new accounts, and LPL Financial terminated its association with Bennie and his company, Bob Bennie Wealth Management, Inc. Bennie responded by filing a federal lawsuit against several individual members of the Department for over $6 million for violating his constitutional rights to free speech, due process, and equal protection. He also sued LPL Financial in an arbitration claiming he was improperly terminated.
Bennie, a successful adviser who claims a spotless 15-year record, included in his complaint quotes from a host of internal Department emails which he claims prove the investigations and sanctions were politically motivated.
One such email is allegedly from Rodney Greiss, a Department Supervisor, to Sheila Cahill, Department legal counsel. Mr. Griess allegedly wrote:
I’ve scheduled a conference call with LPL concerning Bob Bennie and his recent string of activities; i.e. lack of IA disclosure, gun slingin ads, and calling Obama a ‘communist’ and an ‘evil’ man issues. . . . Would like to have you present if you can make it. . .
Ms. Cahill allegedly replied:
Count me in. I think we probably need to have a brief discussion prior to the call about the concerns being raised and the way in which we will raise those concerns. The last thing we want is a Journal Star headline reading something like ‘State interferes with Bennie’s free speech.’ In addition, we need to be mindful of potential political ramifications – given the party affiliation of Bennie and the current administration.
In another email, Jack Herstein, Assistant Director of the Bureau of Securities in Nebraska, and current President of the North American Securities Administrators Association, allegedly wrote:
Bob [Bennie] is always seen wearing a cowboy hat lately, so I say ‘Hang Him High.’
Bennie does indeed sport a cowboy hat. He also has a horse. But so what? He lives in Nebraska, not Manhattan.
It is difficult to determine from the publicly available materials why exactly the Department sanctioned Bennie. The publicly available information discusses a marketing disk of Bennie’s that allegedly lacked a particular disclosure. But this seems inadequate for the trouble he’s been put through. Further, the allegations in his Complaint, especially the quoted emails, are not only embarrassing for the Department, but they paint a picture of a regulator that has strayed from its core mission of protecting investors. This is troublesome not only because Bennie seems to have been unfairly ensnared, but also because the department is spending scarce time and resources on Bennie rather than on pursuing advisers who are injuring consumers. Bennie’s customers seem to be a happy lot. Perhaps more information will emerge as the cases go forward. This will be one to watch.
Published by Jeremy L. Bartell
Financially Regulated is published by Jeremy L. Bartell, a long-time admirer of Wall Street and its interesting cast of regulators. Jeremy is an attorney with Bartell Law in Washington D.C. He represents financial professionals nationwide in Finra inquiries and investigations, Finra arbitration, securities employment disputes and registration and disclosure matters.