SEC Obtains Final Judgment Against Investment Adviser Managers Charged with Misleading Clients
Litigation Release No. 24852 / July 10, 2020
SEC v. Alderson, et al., No. 18 Civ. 4930 (VEC) (S.D.N.Y.) (filed June 4, 2018)
On July 8, 2020, the U.S. District Court for the Southern District of New York entered final consent judgments against Benjamin Alderson, the former CEO of registered investment adviser deVere USA, Inc., and Bradley Hamilton, a former deVere USA manager, in connection with material misstatements and omissions made to clients and prospective clients to whom they recommended overseas pension transfers.
On June 4, 2018, the SEC charged deVere USA with failing 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 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. In the SEC's complaint against Alderson and Hamilton, filed the same day, the SEC alleged that the defendants misled clients and prospective clients about the benefits of pension transfers while concealing material conflicts of interest, including the substantial compensation that they personally stood to receive.
Without admitting or denying the allegations of the SEC's complaint, Alderson and Hamilton, consented to the entry of the final judgments. The final judgment against Alderson enjoins him from violating Sections 206(1), 206(2) and 207 of the Investment Advisers Act of 1940 and from aiding and abetting violations of Sections 204 and 206(4) of the Advisers Act, and Rules 204-2 and 206(4)-7 thereunder and orders him to pay disgorgement of $265,000, prejudgment interest of $10,060, and a civil penalty of $125,000. The final judgment against Hamilton enjoins him from violating Section 206(2) of the Advisers Act and orders him to pay disgorgement of $265,000, prejudgment interest of $10,060, and a civil penalty of $75,000. The judgments provide that all amounts paid shall be combined with the Fair Fund created in In the Matter of deVere USA, Inc., Administrative Proceeding File No. 3-18527 (June 4, 2018), to be distributed pursuant to a plan of distribution entered in that action.
In a related administrative proceeding, the SEC on July 9, 2020 issued an order permanently barring Alderson from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, with the right to re-apply after two years.
The SEC's investigation was conducted by Michael Ellis and Wendy Tepperman, and the matter was litigated by Mr. Ellis and Dugan Bliss, with assistance from Roseann Daniello and Lorraine Collazo. The case has been supervised by Lara Shalov Mehraban.