New York-based investment adviser
deVere USA has agreed to pay an $8 million civil penalty related to its failure to disclose conflicts of interest to its retail clients, the Securities and Exchange Commission said Monday.
The settlement calls for the establishment of a fund to distribute 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 chief executive 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 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 SEC order said.
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It also said that deVere USA made materially misleading statements concerning tax treatment and available investment options.
Separately, the SEC filed charges against Benjamin Alderson, the firm's former CEO, and Bradley Hamilton, a former manager at the firm.
The SEC's complaint alleges that they misled clients and prospective clients about the benefits of pension transfers while concealing material conflicts of interest, including the substantial compensation that they stood to receive. The SEC is seeking an injunction, disgorgement plus interest and civil money penalties in their case against the two former executives.