The New York-based advisory firm failed to disclose agreements with overseas product and service providers that resulted in commissions being paid to advisers and “an overseas affiliate”, according to the US Securities and Exchange Commission.
The affiliate was not named in the SEC document but described as a third-party product provider.
The SEC found that the undisclosed commission – 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.
The company also made materially misleading statements concerning tax treatment and available investment options, the regulator said.
Without admitting or denying the findings, deVere USA “consented to the SEC’s order, which finds the firm violated the Investment Advisers Act of 1940, including the antifraud provision, and imposes remedies that include an $8m (£6m, €6.8m) penalty and engaging an independent compliance consultant”, the SEC stated.
Filed charges
The US regulator also announced it is also taking separate action against two former deVere USA investment adviser representatives, one of whom was chief executive of the firm.
Charges have been filed against chief executive Benjamin Alderson and former manager Bradley Hamilton.
It is alleged that they misled clients and prospective clients about the benefits of pension transfers while concealing material conflicts of interest, including upfront commission of 7% that Alderson and Hamilton personally stood to receive.
The SEC’s complaint against Alderson and Hamilton alleges that they violated the Investment Advisers Act and it is seeking an injunction, disgorgement plus interest, and civil money penalties.
Marc Berger, director of the SEC’s New York regional office, said: “Investment advisers have an obligation to disclose direct and indirect financial incentives.
“DeVere USA brushed aside this duty while advising retail investors about their retirements assets, and today’s settlement will result in a Fair Fund distribution to deVere USA’s retail clients who were deprived of this information.”
DeVere statement
A spokesperson for deVere USA said the company “is pleased to announce that the SEC has accepted its offer to settle an administrative proceeding relating to certain aspects of its historical business in the US”.
“The settlement clears that way for the company to continue to develop its investment advisory business in the US,” the spokesperson added.
DeVere USA has hired a new management team and “strengthened its overall systems and controls”.
“As part of its settlement with the SEC, the company has agreed to retain an independent compliance consultant to conduct annual reviews over the next three years,” the spokesperson said.
Pension transfers
This is not the first time that deVere has encountered difficulties with pension transfers.
DeVere UK stopped providing advice on overseas pension transfers in February 2017.
At the time, a deVere spokesperson said the company had “entered into a voluntary requirement to cease providing advice in this arena”.
