SEC probe hits international FA firm targeting UK expat pension pots

Published:  24 May at 6 PM
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An international financial advice firm specialising in targeting British expats’ pension funds and investments is now being investigated by the USA Securities and Exchange Commission.

The DeVere Group has long been active in retirement destinations favoured by expats from the UK, with its high fees and aggressive marketing tactics drawing complaints from retirees whose pension savings have been decimated. Already sanctioned in Hong Kong and Singapore, formerly listed in the Thailand SEC’s unauthorised FAs list and on Japan’s unauthorised list, the international firm is now under investigation by the USA authorities as well as by South Africa’s Financial Services Board.

DeVere opened its US office in 2012, mainly employing young British men whose brief was to encourage UK expats to move their pension plans overseas. Tax benefits were given as the reason, and the majority of contacts were made via cold-calling and messages on social media sites such as LinkedIn.

According to former employees, investments sold by DeVere salesmen included US banks’ structured notes, a form of derivatives used to bet on the stock market. One such, issued by Goldman Sachs, offered a return of 11 per cent should three indexes rise by a specified date, with DeVere taking a four per cent upfront commission.

However, DeVere’s SEC registration was as investment advisors rather than broker-dealers, and was disallowed the receipt of commissions. When questioned on this point, DeVere declined to answer, and Goldman Sachs terminated their association with the firm in 2014 without giving a reason.

DeVere’s history of regulatory run-ins goes back to at least 2008, when its Singapore subsidiary attracted fines for the selling of insurance products by unlicensed advisors in breach of its license mandate. The judgement prompted DeVere to shut down its Singapore office later in the same year.

In 2016, the firm’s Hong Kong subsidiary was substantially fined for using unlicensed advisers and failing to give information to the local regulatory agency, resulting in the firm using a recent acquisition, Acuma Hong Kong Ltd, to continue its Hong Kong presence. South Africa’s Financial Services Board is yet another authority investigating the DeVere Group, with the investigation focusing on mis-selling as regards fees, disclosures and the practice of locking clients’ money up for years.

Expat investor sites on the internet have long been instrumental in publishing accounts of DeVere employees’ irregular and aggressive behaviour to clients, including endless high-pressure cold-calling via lists of expats’ private phone numbers. Unregistered, unqualified FAs working for the firm could make huge money by failing to mention high annual management fees, 7 per cent pension transfer fees and commissions on investment advice.

Source: Bloomberg
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