DeVere USA settles $8m SEC case
DeVere USA, Inc has agreed to pay $8m to settle an administrative proceeding with the US Securities and Exchange Commission (SEC) relating to some of the company’s historical business in the US.
The US arm of international IFA giant said in a statement earlier today that the SEC has accepted the company’s offer of $8m to settle relating to “certain aspects” of its historical business in the US.
As part of its settlement with the SEC, the deVere USA has agreed to retain an independent compliance consultant to conduct annual reviews over the next three years.
The statement read: “DeVere USA reached this agreement with the SEC consistent with our commitment to clients and in the interest of putting the matter behind us. The settlement clears the way for the company to continue to develop its investment advisory business in the US”.
The SEC order stated 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 said that deVere USA made “materially misleading statements” concerning tax treatment and available investment options.
The $8m settlement will result in the establishment of a Fair Fund for distribution of the penalty to affected clients, the SEC said. It also announced the filing of a litigated action against two former deVere USA investment adviser representatives, one of whom was the CEO of the firm.
Without admitting or denying the SEC’s findings, deVere USA consented to the SEC’s order.
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 Berger, director of the SEC’s New York Regional Office.”
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.
DeVere USA added that it has recently hired a new management team and strengthened its overall systems and controls in the US.
The company added that it is “committed” to treating its clients fairly and “keeping their interests at the heart of its business”.
“High quality client service is paramount at deVere USA, and we work diligently to ensure that we deliver on this goal. We look forward to continuing to focus on working with our clients and helping them meet their long-term financial goals,” the statement concluded.