The Securities and Exchange Commission today announced that New York-based investment adviser deVere USA, Inc. has agreed to pay an $8 million civil penalty related to its failure to disclose conflicts of interest to its retail clients. The settlement will result in the establishment of a Fair Fund for distribution of the penalty to affected clients. The SEC also announced the filing of a litigated action against two deVere USA investment adviser representatives, one of whom was the CEO of the firm.
According to the SEC’s order, deVere USA failed to disclose agreements with overseas product and service providers that resulted in compensation being paid to deVere USA advisers and an overseas affiliate. The SEC order finds that the undisclosed compensation—including an amount equivalent to 7% of the pension transfer value—created an incentive for deVere USA to recommend a pension transfer and particular product or service providers that were obligated to make payments. The order also finds that deVere USA made materially misleading statements concerning tax treatment and available investment options.
The SEC separately filed charges against the former deVere USA CEO, Benjamin Alderson, and a former manager, Bradley Hamilton. The SEC’s complaint, filed in federal district court in Manhattan, alleges that Alderson and Hamilton misled clients and prospective clients about the benefits of pension transfers while concealing material conflicts of interest, including the substantial compensation that Alderson and Hamilton personally stood to receive.
“Investment advisers have an obligation to disclose direct and indirect financial incentives,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “deVere USA brushed aside this duty while advising retail investors about their retirement assets, and today’s settlement will result in a Fair Fund distribution to deVere USA’s retail clients who were deprived of important information.”
Without admitting or denying the SEC’s findings, deVere USA consented to the SEC’s order, which finds that the firm violated the Investment Advisers Act of 1940, including the antifraud provisions, and imposes remedies that include an $8,000,000 penalty and engaging an independent compliance consultant. The SEC’s complaint against Alderson and Hamilton alleges that they violated the Investment Advisers Act and seeks an injunction, disgorgement plus interest, and civil money penalties.
The SEC’s investigation was conducted by Michael Ellis, Haimavathi Marlier and Wendy Tepperman in the New York office. Assisting the investigation was Roseann Daniello in the New York office. The litigation against Alderson and Hamilton will be led by Ms. Marlier and Mr. Ellis, and the case is being supervised by Lara Shalov Mehraban. The SEC examination that led to the investigation was conducted by Michael Devine, Phillip Ma, Edward Perkins, and Joseph DiMaria of the New York office. The SEC appreciates the assistance of the United Kingdom’s Financial Conduct Authority.
https://www.sec.gov/
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