Attractive Pitch
DeVere opened its U.S. outpost in 2012. It hired mainly young British men to pitch their countrymen on the tax benefits of moving their pensions overseas. Former employees say they spent most of their time cold-calling and sending messages on LinkedIn.
The salesmen had an attractive pitch. Under British law, some workers who had retirement savings in the U.K. could move them overseas and avoid taxes they’d have to pay when they withdrew the money.
There were a lot of fees. In addition to an annual management fee, DeVere would charge a fee on the pension transfer that could be as high as 7 percent, spread over several years, three former employees said. Clients who transferred pensions would have to decide how to invest the money, giving DeVere salesmen another chance to earn fees.
Among the investments DeVere sold in the U.S. were structured notes from banks including Goldman Sachs Group Inc. and Morgan Stanley, according to the former employees. These investments, a form of derivatives, are a way to bet on the stock market. One Goldman note offered an 11 percent return if three indexes all went up by a designated date. DeVere received a 4 percent upfront commission, the former employees said.
Collecting Commissions
Because DeVere registered with the SEC as an investment adviser, not as a brokerage, its employees aren’t allowed to collect commissions.
“If you receive transaction-based commissions then you need to be registered as a broker-dealer,” said Seth Taube, a former SEC enforcement official who’s now a lawyer at Baker Botts LLP in New York.
DeVere didn’t respond to questions about commissions. In 2014, Benjamin Alderson, then head of the New York office, told International Adviser about SEC regulations: “You cannot be anything but squeaky clean or it will show.”
Andrew Williams, a spokesman for Goldman Sachs, said the bank terminated its distribution relationships with DeVere last year, declining to say why. Mark Lake, a Morgan Stanley spokesman, declined to comment.