New York-based financial adviser deVere USA has agreed to pay a civil penalty of $8m to resolve U.S. Securities and Exchange Commission (SEC) allegations of failing to reveal conflicts of interest to clients with UK pensions.
SEC accused the firm of concealing arrangements with overseas service providers that led to compensation being paid to the firm.
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The regulator found 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 watchdog also filed charges against ex-deVere USA CEO Benjamin Alderson and former manager Bradley Hamilton. The pair has been accused of misleading clients about the benefits of pension transfers and concealing material conflicts of interest.
The firm was also accused of making misleading statements regarding tax treatment and investment options.
SEC New York regional office director Marc Berger said: “Investment advisers have an obligation to disclose direct and indirect financial incentives,”
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By GlobalData“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.”
The firm agreed to the settlement without admitting or denying the charges. The settlement includes the establishment of a Fair Fund to distribute the fine to affected customers.
As part of the settlement, the firm also agreed to engage an independent compliance consultant to review the business.
“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 firm said.
