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Investment Adviser Fined $8Mn Over Undisclosed Compensation; Ex-Managers Also Charged
by Howard Haykin
New York-based investment adviser deVere USA agreed to pay an $8 million civil penalty (and to engage an independent compliance consultant) to settle SEC charges that it failed to disclose conflicts of interest to its retail clients. The settlement will result in the establishment of a Fair Fund for distribution to affected clients.
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.
Separate SEC charges were filed against 2 deVere USA investment adviser reps: (i) former deVere USA CEO Benjamin Alderson; and, (ii) former manager Bradley Hamilton. They are accused of misleading 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. The SEC seeks to impose civil penalties and disgorgement.
[For further details, click on … SEC Order]
