Did You Lose Money Because of Ameriprise Financial? Are You Aware of Complaints and Fines Against Ameriprise Financial?
Updated on: December 27, 2023
Ameriprise Financial Services, LLC (“Ameriprise Financial”) (CRD # 6363) is a broker-dealer and has been the subject of at least seventy-eight (78) complaints filed by regulatory organizations like FINRA and many more by investors like yourself. At Patil Law, we have investigated Ameriprise Financial, its regulatory complaints and fines, and its customer complaints. If you’ve invested your hard-earned money with Ameriprise Financial, you should be very concerned about any regulatory actions, regulatory fines, or customer complaints against your brokerage firm.
Our team of attorneys specialize in representing investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors. As an investor, you may be entitled to compensation for losses accrued due to mismanagement of your investments.
If you believe you have a claim against Ameriprise Financial, you should strongly consider hiring an investment fraud lawyer and not wait until it’s too late to file a claim. Reach out to our legal team via the secure and private online form or call our firm directly toll-free at 1-800-950-6553 for a free consultation so that we can discuss your case and see what we can do to help you get the compensation you need and deserve. We do not charge anything for the ability to discuss your matter and evaluate your potential case.
Jump to Topic
Do I Have an Investment Fraud Case Against Ameriprise Financial?
How To File a Claim Against Ameriprise Financial To Get Your Money Back
Client Complaints – Is Your Financial Advisor on This List?
Did Misconduct By an Ameriprise Financial Advisor Impact Your Investments? What Can You Do?
Ameriprise Financial Has Many Regulatory Complaints and Fines
A Closer Look Into Ameriprise Financial’s Regulatory Issues
Next Steps and Free Consultation with Our Legal Team
Do I Have an Investment Fraud Case Against Ameriprise Financial?
✅ YES, if you’ve experienced financial losses due to the actions or misconduct of Ameriprise Financial or its staff, you have the right to pursue legal action against them. You can sue Ameriprise Financial but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding.
FINRA arbitration proceedings are generally private proceedings that can last anywhere from a few months to approximately a year. Our attorneys have personal experience in representing clients in FINRA arbitration proceedings and know very well how you can not only sue Ameriprise Financial in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a case against Ameriprise Financial is to reach out to our legal team at Patil Law via the secure and private online form or call us toll-free at 1-800-950-6553 for a complimentary consultation.
Who is Ameriprise Financial?
Ameriprise Financial (CRD # 6363) is a registered broker-dealer. It operates as a full-service independent broker-dealer, providing a range of financial products and services to individual investors and financial advisors. As a registered broker-dealer, Ameriprise Financial is subject to regulations and oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
It is required to comply with industry standards and regulations to ensure the protection of its clients’ interests. A failure to comply with industry standards by either its brokers or the firm itself can result in disciplinary actions, fines, or other penalties imposed by regulatory authorities.
How To File A Claim Against Ameriprise Financial To Get Your Money Back
If you have questions about Ameriprise Financial, its advisors, or the management or performance of your accounts, please contact our legal team at Patil Law via the secure and private online form or call us toll-free at 1-800-950-6553 for a free and complimentary initial consultation. Our attorneys have experience handling well over a thousand securities arbitration claims, and our law firm has successfully recovered over $25 million for our clients to date.
We understand the stress that comes along with realizing that your financial advisor or brokerage firm has made poor decisions with your money. We can help you, as we have helped hundreds of other clients in the past.
Client Complaints – Is Your Financial Advisor on This List?
There have been scores of customer complaints filed against Ameriprise Financial stockbrokers and investment advisors over the years. Many of these complaints deal with financial advisor misconduct, poor or unsuitable investment recommendations, failure by these brokerage firms to supervise their employees (the financial advisors), and general fraud against consumers. We have launched many investigations of current and former Ameriprise Financial advisors:
- James Knee currently barred (previously with Voya Financial and Ameriprise Financial)
- David Monckton with Ameriprise Financial (previously with Voya Financial and ING Financial Partners)
- Douglas Everett with Ameriprise Financial (previously with Voya Financial and Axa Advisors)
- Aaron Gore with Ameriprise Financial (previously with Voya Financial and Edward Jones)
- Mark Chrisenberry with Ameriprise Financial (previously with Voya Financial)
- Samuel Head with Ameriprise Financial (previously with Voya Financial and NYLIFE Securities)
- Matthew King with Cambridge Investment (previously with Cambridge Investment Research Advisors and Ameriprise Financial)
- Denis Michael Drummey currently unaffiliated (previously with Ameriprise Financial and LPL Financial)
- Daniel Leonard Ascani currently unaffiliated (previously with LPL Financial and Ameriprise Financial)
- Anida Venniro Ameriprise Financial (previously with LPL Financial and AXA Advisors)
- Bradley Graham Barnett with LPL Financial (previously with KPP Advisory Services and Ameriprise Financial)
- Brian Jesse Singleton with Ameriprise Financial (previously with LPL Financial and Cuna Brokerage Services)
- Jeremy L Darstek with Ameriprise Financial (previously with LPL Financial and AXA Advisors)
- Benjamin Haas currently unaffiliated (previously with LPL Financial and Ameriprise Financial)
- Matthew S Brown with LPL Financial (previously with Ameriprise Financial Services and Ameriprise Advisor Services)
- Paul John Stanislaw Jr. currently unaffiliated (previously with LPL Financial and Ameriprise Financial)
- Anthony Makransky with LPL Financial (previously with Ameriprise Financial and Banc of America Investment Services
- Patricia Ann Gleason currently unaffiliated (previously with Ameriprise Financial and Cetera Advisors)
- Mark Barrand currently unaffiliated (previously with Ameriprise Financial and Cetera Advisors)
- Brent Blaus with LPL Financial (previously with Cetera Investment Advisers and Ameriprise Financial)
- Michael Schwartz with Ameriprise Financial (previously with Cetera Advisor Networks and Royal Alliance Associates)
- Norman Robbins with Ameriprise Financial (previously with Cetera Advisor Networks and Summit Financial Group)
- Timothy Farris with Cetera Advisors (previously with SPC and Ameriprise Financial)
- Kevin Houser with Ameriprise Financial (previously with LPL Financial and Wachovia Securities)
- Joseph Pearce with LPL Financial LLC (previously with Ameriprise Financial and IDS Life Insurance Company)
Did Misconduct By an Ameriprise Financial Advisor Impact Your Investments?
If you have lost money investing with any of these Ameriprise Financial advisors or others within this brokerage firm, it’s important that you reach out to an investment loss attorney quickly because the statutes of limitations can bar your claims. Call our legal team at Patil Law toll-free at 1-800-950-6553 or reach out to us via the secure and private online form for a free initial consultation.
Ameriprise Financial Has Many Regulatory Complaints and Fines
There have been approximately seventy-eight (78) state and self-regulatory body disclosure events against Ameriprise Financial; that is, final and formal proceedings initiated by a regulatory authority like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) for a violation(s) of investment-related rules or regulations. In addition, there have been countless customer complaints filed against Ameriprise Financial for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record.
Our legal team at Patil Law has reported and written about these regulatory problems and customer complaints over many years. A few of the notable FINRA Sanctions for its Supervisory Failures are below.
A Closer Look Into Ameriprise Financial’s Regulatory Issues
Ameriprise Financial has been repeatedly censured, warned, and fined for its own misconduct and failure to supervise its army of financial advisors. Details of seventy-eight (78) regulatory issues are listed below:
Fined $45,000 for Alleged Supervisory Failures in Complying With Municipal Securities Rulemaking Board’s (“MSRB”) Requirements (AWC No. 2015046583001)
Overview from FINRA’s Disciplinary Office:
In 20150465830, the Department of Market Regulation’s Municipal Securities Bonds Team and the Department of Member Regulation (collectively, the “staff’) reviewed the firm’s municipal securities trading for compliance with Municipal Securities Rulemaking Board (“MSRB”) requirements from December 1, 2013 through December 31, 2014 (the “review period”).
During the review period, the firm affected 23 municipal bond transactions in amounts below the minimum denomination set for the bonds. The firm also indicated it was unaware that the Official Statements for two of the securities it recommended involving eight of the above transactions limited the sale/resale of such securities to Qualified Institutional Buyers (“QIBs”), as defined in Rule 144A of the Securities Act of 1933, which resulted in the sale of such securities to customers who were not QIBS.
Additionally, the firm failed to disclose to customers at or prior to the time of the trade that the transaction was being effected in an amount below the minimum denomination and of the above sales restriction. The firm also had an insufficient supervisory system reasonably designed to achieve compliance with the MSRB’s rules regarding minimum denomination and the suitability of recommendations to customers. Accordingly, the firm violated MSRB Rules G-15(f) and G-19, related disclosure requirements under MSRB Rules G-17 and G-47, and related supervisory requirements under MSRB Rule G-27, as detailed below.
Fined $850,000 for Alleged Failure to Detect and Prevent Representative from Converting $370,000 From Five Customers Via Wire Transfers (AWC No. 2014040269301)
Overview from FINRA’s Disciplinary Office:
Between October 2011 and September 2013 (the “relevant period”), Ameriprise failed to detect and prevent the conversion, via nine wires, of more than $370,000 from five of its customers by one of its registered representatives. The conversion went undetected for two years because Ameriprise failed to establish, maintain, and enforce a supervisory system that was reasonably designed to adequately review and monitor the transmittal of funds from accounts of customers to third parties, including those controlled by registered representatives of the firm. Ameriprise consequently violated NASD Rules 3010 and 3012 and FINRA Rule 2010.
Fined $100,000 for Alleged Participation in the Sale of Initial Public Offerings of Closed End Funds (“CEFs”) (AWC No. 2014039843501)
Overview from FINRA’s Disciplinary Office:
From January 2010 through April 2013 (?the relevant time period”), AFSI participated in the sale of initial public offerings ofClosed End Funds (“CEFs”). CEFs are generally intended for use as long-term investments. Sales charges to the customers who purchased at the time of the initial public offering (‘’IPO”) are built into the otTering price of the CEF; in most cases, the market price of the CEFs generally declines after the initial – ‘ offering. Despite being aware that CEFs purchased at the 1PO offering were most suitable for long-term investments and that the sales charges applied to purchases at the IPO made short-term trading of these CEFs generally unsuitable. AFS1 failed to establish and maintain a supervisory system reasonably designed to detect and prevent at least one of its registered representatives from engaging in unsuitable short-term trading of CEFs purchased at the IPO.
By virtue of the above, AFSI violated NASD Rule 3010 and F??IRA Rule 2010.
Fined $150,000 for Alleged Supervisory Failures In Creating and Sending Account Records to Multiple Customers Within 30 Days of Account Opening (AWC No. 2014043104601)
Overview from FINRA’s Disciplinary Office:
From January 2008 through October 2014, Ameriprise failed to create and send to approximately 219,000 customers an account record within 30 days of the account opening for each of these customers. This conduct violates SEC Rule 17a-3, NASD Rule 3110 (for conduct before 12/5/11), FlNRA Rule 4511 (for conduct after 12/4/11), and FINRA Rule 2010. In addition, in violation ofNASD Rule 3010 and FINRA Rule 2010, Ameriprise failed to establish, maintain,and enforce a supervisory system and written supervisory procedures reasonably designed to ensure compliance with applicable laws and regulations relating to the creation and distribution of account records at account opening.
Fined $50,000 for Allegedly Failing to Detect a Representative Altering Documents In an Arbitration Proceeding (AWC No. 2010022977801)
Overview from FINRA’s Disciplinary Office:
This disciplinary proceeding originated from a referral by a FINRA Dispute Resolution arbitration panel to FINRA’s Member Regulation Department pursuant to FINRA Code of Arbitration Procedure for Customer Disputes Rule 12104.1 The arbitration panel made the referral because Respondents Ameriprise Financial Services, Inc. and David B. Tysk produced documents in an arbitration proceeding without disclosing that Tysk had altered the documents after receiving a complaint letter from a customer.
The altered documents were printouts of notes of Tysk’s contacts with customer GR, which Tysk had maintained in a computer program. Tysk made the changes appear as if they were notes made contemporaneously with the events described. GR became suspicious because the notes seemed to be too-perfectly tailored to the defense of his claim. GR requested further discovery to determine whether the notes had been altered after he lodged his complaint with Ameriprise. Respondents opposed the requests.
For months after the firm provided the notes in discovery, Tysk said nothing about the alterations. In a meeting to prepare for the arbitration hearing, he finally disclosed to Ameriprise that he had altered the notes. Nonetheless, neitherAmeriprise nor Tysk informed GR that the notes had been altered.
As the arbitration hearing date approached, GR continued trying to obtain information about whether the notes were what they appeared to be. Ameriprise and Tysk opposed GR’s efforts.
Just before the hearing, Ameriprise found an exception report relevant to GR’s claim, which it should have provided months earlier. As soon as it could, Ameriprise turned it over to GR. GR claimed that the report was a”smoking gun,” which may have been intentionally withheld, because it could have prompted Tysk to doctor his notes. GR demanded to be allowed to examine Tysk’s computer program to analyze the notes.
Over Respondents’ objections, the arbitration panel ordered Ameriprise and Tysk to give GR access to Tysk’s computer hard drive. Forensic examination of the hard drive revealed for the first time substantive edits that Tysk had made to the notes after receiving GR’s complaint letter.
At the conclusion of the arbitration hearing, the arbitration panel sanctionedAmeriprise and Tysk for violating arbitration discovery rules. The panel referred the matter to FINRA’s Member Regulation Department for a disciplinary investigation.
After the investigation, the Department ofEnforcement filed a Complaint, which it subsequently amended. The gravamen of the Amended Complaint is that Ameriprise and Tysk violated just and equitable principles of trade and the Code ofArbitration Procedure by producing the notes during the arbitration without disclosing that Tysk had altered them.
The underlying facts are largely undisputed. Respondents assert nonetheless that they did not act unethically. In summary, Respondents contend that Tysk altered his computer notes in good faith, to make them more accurately reflect the substance of conversations he had with GR. They argue that they complied fully with FINRA’s arbitration discovery rules because they produced the notes at the arbitration hearing. Respondents maintain that they planned to have Tysk disclose the alterations during his testimony at the arbitration. They argue that this was the appropriate approach because arbitration procedures do not provide for extensive discovery, such as pre-hearing depositions and written interrogatories, and do not require an explanation in advance of the hearing that the notes had been altered. As to the separate claim that Ameriprise failed to produce the exception report as required, the firm attributes this failure to simple error, which it corrected promptly.
For the reasons discussed below, the Extended Hearing Panel concludes that Tysk violated NASD Rule 21 10, FINRA Code of Arbitration Procedure for Customer Disputes IM12000, and FINRA Rule 2010 by altering the customer contact notes and failing to inform Ameriprise of the alterations when he produced them in the arbitration proceeding. The Panel further concludes that Ameriprise violated FINRA Code ofArbitration Procedure for Customer Disputes IM-12000 and FINRA Rule 2010 by failing to inform GR that Tysk had altered his notes before they were produced in discovery, and by failing to produce the exception report as required by the arbitration rules. For these violations, Tysk is suspended in all capacities for three months and fined $50,000, and Ameriprise is censured and fined $100,000.
Fined $525,000 for Alleged Supervisory Failures In Timely Delivering Mutual Fund Prospectuses to Customers Within Three Business Days of Purchase (AWC No. 2011029100301)
Overview from FINRA’s Disciplinary Office:
From January 1, 2009 through June 30, 2011 (the “Relevant Mutual Fund Review Period”), Ameriprise failed to timely deliver mutual fund prospectuses to Ameriprise customers within three business days of their purchases in approximately 580,000 transactions (approximately 4% of the mutual fund purchase transactions that required Ameriprise to deliver a mutual fund prospectus within three business days). Ameriprise also failed to establish and maintain adequate supervisory systems and written supervisory procedures reasonably designed to monitor and ensure the timely delivery of mutual fund prospectuses, as required by Section 5(b)(2) of the Securities Act of 1933 (“the Securities Act”). As a result of these failures, Ameriprise violated NASD Conduct Rules 3010(a)(1) and (b)(1), and FINRA Rule 2010.
Fined $750,000 for Alleged Supervisory Failures In Detecting Representative Misconduct of Fraudulently Transferring Money Using False Wire Requests (AWC No. 2010025157301)
Overview from FINRA’s Disciplinary Office:
From December 2006 until October 2010, an AFSI registered representative converted approximately $790,000 from two customers by submitting false wire requests to move funds from these customers’ brokerage accounts directly to bank accounts that the AFSI representative controlled. In failing to detect this misconduct for nearly four years, Respondents missed numerous supervisory red flags.
Respondents did not have supervisory systems that were reasonably designed to adequately review and monitor the transmittals of funds from customer accounts to third-party accounts. Through this conduct, Respondents violated NASD Conduct Rules 3010, 3012 and 2110 and FINRA Rule 2010.
In addition, AFSI did not promptly prevent registered representatives who had been terminated from continuing to access the firm’s computer systems. AFSI therefore did not properly protect customer records and information. Through this conduct, AFSI violated Rule 30 of Regulation S-P, NASD Conduct Rule 3010 and FINRA Rule 2010.
Fined $50,000 for Alleged Supervisory Failures In Detecting and Preventing Broker Misconduct (AWC No. 2008013648002)
Overview from FINRA’s Disciplinary Office:
Ameriprise failed to establish, maintain and enforce a supervisory system that was reasonably designed to detect and prevent misconduct by one of its brokers, thereby violating NASD Conduct Rules 3010 and 2110.
Fined $10,000 for Alleged Supervisory Failures In Properly Reporting Corporate Bond Transactions (AWC No. 20070071181)
Overview from FINRA’s Disciplinary Office:
Ameriprise violated NASD Marketplace Rule 6230 and NASD Conduct Rule 2110 by failing to properly report corporate bond transactions in the Trade Reporting and Compliance Engine (TRACE) reporting system in December 2005, January 2006 and December 2006.
Fined $145,000 for Allegedly Awarding Non-Cash Compensations to Non-Selling Field Leaders Through Certain Incentive Programs (AWC No. 2005000682901)
Overview from FINRA’s Disciplinary Office:
During the period January 2002 through December 2004, Ameriprise awarded non-cash compensation to non-selling field leaders, through four sales incentive programs, based, in part, on criteria that favored or gave additional weight to the sale of the firm’s proprietary mutual funds. For “non-selling field leaders,” who supervised registered representatives but did not engage in selling activity, including Group Vice Presidents, Field Vice Presidents and certain other managers (“Field Leaders”), eligibility for the four incentive programs was measured using a scorecard. A component of each Field Leader’s scorecard, which accounted for between 25% and 30% of the total score, measured the sale of the firm’s proprietary investment company products, including Ameriprise’s proprietary mutual funds, by the advisors who reported to that Field Leader. The top Field Leaders, based on their scorecard results, were awarded trips and credits to redeem for jewelry. The firm also awarded certain Field Leaders long-term incentive awards in the form of stock options and restricted stock awards based, in part, on the results of the Field Leader’s scorecard.
As a result, the incentive programs that awarded non-cash compensation to Field Leaders based on their scorecard results were not based on the total sales of associated persons with respect to all investment company securities distributed by Ameriprise. These incentive programs also failed to give equal weight to the sale of all investment company products. Accordingly, the non-cash compensation incentive programs used by Ameriprise in 2002,2003, and 2004 for its Field Leaders violated NASD Rules 2830(l)(5)(D)(i) and (ii) and 2110.
In addition, during the period January 2002 through August 2005, Ameriprise did not have sufficient procedures, including written procedures, that specified the time periods that customer transaction data must be maintained in an easily accessible place, as required by SEC Rule 17a-4. The firm also did not have adequate procedures that addressed how and when the data on its various systems, including customer transaction data, was to be maintained, kept or archived. By failing to establish and maintain procedures, including written procedures, reasonably designed to achieve compliance with the recordkeeping requirements of SEC Rule 17a-4 and NASD Rule 3110(a), Ameriprise violated NASD Rules 3010(b) and 2110.
Fined $20,000 for Alleged Supervisory Failures In Preventing Prohibited Disclosure of Suspicious Activity Reports (AWC No. 2005000901901)
Overview from FINRA’s Disciplinary Office:
NASD Rules 2110, 3011(B) – Respondent member failed to establish and implement adequate procedures reasonably designed to prevent the prohibited disclosure of a Suspicious Activity Report (SAR) as mandated by the Bank Secrecy Act and the regulations promulgated thereunder.
Fined $12,300,000 for Allegedly Operating Preferred Provider Program In Which Mutual Funds Paid A Fee For Special Treatment And Priority (AWC No. EAF0301200002)
Overview from FINRA’s Disciplinary Office:
NASD Conduct Rules 2830(K) and 2110- Respondent firm maintained a shelf space program called the Preferred Provider Program. In return for a fee, mutual funds participating in the Preferred Provider Program were given preferential treatment over other funds that could be purchased through the firm. The benefits included enhanced access to the firm’s sales force, including participation in National Conferences and Regional meetings, distribution and display of marketing materials at the firm branches, in-office visits with registered representatives, and participation of firm advisors in due diligence meetings organized by participating fund complexes. In addition, the firm promoted the funds offered by the Preferred Providers, but not other fund complexes, on its internal website. The website identified the participating complexes as Preferred Providers and posted their sales literature and seminar outlines as well as up-to-date information about the funds and fund managers for preferred providers. Finally, the firm charged its advisors reduced sales ticket charges for the sale of preferred provider funds. These benefits were not available to non-participating fund complexes.
Fined $500,000 for Alleged Supervisory Failures in Establishing and Maintaining Procedures (AWC No. EAF0400340002)
Overview from FINRA’s Disciplinary Office:
From May 2001 through the end of 2004, AEFA sold over $1.1 billion of 529 college savings plans (“529 plans”) to over 138,000 customer accounts. During this period, AEFA failed to establish and maintain procedures, including written supervisory procedures, that were reasonably designed to achieve compliance with suitability obligations as they related to the sale of 529 plans. In fact, from May 2001 through October 20, 2003, when AEFA sold over $625 million of 529 plans to its customers, the firm had no effective procedures in place specifically addressing the firm’s suitability obligations relating to the sale of 529 plans. Most of the procedures in place at that time were general compliance requirements relating to the sale of all products offered by AEFA. Although the firm established some procedures in October 2003, those procedures were not adequate.
From May 2001 through October 2003, the only 529 plan offered and sold by AEFA was the Tomorrow’s Scholar College Savings Plan sponsored by the state of Wisconsin (”the Wisconsin plan”). During this period, state tax benefits either were available or became available for investors residing in twenty-three states (other than Wisconsin) and the District of Columbia who purchased 529 plans offered by their state of residence. AEFA sold over S200 million of the Wisconsin plan to customers who lived in those twenty-four states during this time period, at a time when an income tax deduction was available or became available in those states for such an investment. As a result, numerous customers did not receive state income tax benefits that might have been available if they had purchased a 529 plan offered by their state of residence.
These sales occurred when AEFA did not have adequate procedures governing the sale of 529 plans. For instance, AEFA did not have procedures during this time period requiring that registered representatives weigh the state income tax benefit that might be obtained by purchasing an in-state plan against any benefits that might be provided by a recommended out of-state plan, such as investment performance, investment choices, fees and expenses, or other factors.
By failing to have procedures or a system for supervision reasonably designed to achieve compliance with suitability requirements as they related to the sale of 529 plans, AEFA violated Municipal Securities Rulemaking Board (“MSRB”) Rule G-27.
Fined $25,000 for Alleged Supervisory Failures In Monitoring Representative (AWC No. C05050021)
Overview from FINRA’s Disciplinary Office:
NASD Rules 2110, 3010(A) – Respondent member failed to have adequate procedures in place to monitor whether the managing principal representative performed certain supervisory reviews of the Office of Supervisory Jurisdiction, or to identify and review transactions by individual registered representatives under MPR’s supervision.
Fined $13 Million for Allegedly Recommending Class B Share Purchases to Customers Through Representatives (RR) (AWC No. CRC050001)
Overview from FINRA’s Disciplinary Office:
This matter arises from a review of AEFA’s sales of Class B and Class C shares of mutual tunas between January 1,2002 and July 31,2003 (the “review period”). Within the review period, AEFA effected transactions where it made recommendations to customers to purchase Class B shares through its registered representatives (“RRs”). In connection with many of its recommendations, AEFA did not consistently consider or adequately disclose at the point of purchase that an equal investment in Class A shares would generally have been more advantageous for certain customers, Accordingly, AEFA will undertake a remediation plan that includes more than 182,000 transactions involving at least 30,009 customer households
In particular, the firm did not consistently consider that large investments in Class A shares of mutual funds entitle customers to breakpoint discounts on sales charges, generally beginning at the $50,000 investment level, which are not available for investments m Class B shares. Customers may be entitled to breakpoints based upon a single mutual fund purchase, multiple purchases in the same “family of funds” and/or mutual fund investments held, at the time of the new purchase, by members of the customer’ a “household,” as that term is defined in the prospectus of the fund in which the shares are being purchased. Unlike Class A shares, Class B shares are also subject to contingent deferred sales charges (“CDSCs”) for a period of time, generally- six yens, as well as higher ongoing Rule 12b-l fees for as long as the Class B shares are held. The potential CDSCs and the higher ongoing Rule 12b-1 fees significantly affect the return on customers’ mutual fund investments.
In addition, AEFA’s supervisory and compliance policies and procedures during the review period were not reasonably established, maintained and/or enforced, so that the firm, at the point of each sale, provided adequate disclosure of, or consideration to, on a consistent basis, the benefits of the various mutual fund share classes as they applied to individual customers.
As a result of the foregoing, AEFA violated NASD Conduct Rules 2110,2310, and 3010.
Fined $375,000 for Alleged Supervisory Failures In Meeting New Jersey’s Suitability Requirements For Investing In Ais
Overview from FINRA’s Disciplinary Office:
Ameriprise’s failure to ensure that its customers investing in AIS satisfied the New Jersey prospectus suitability requirements constitutes a failure to reasonably supervise pursuant to N.J.S.A. 49:3-58(A)(2)(XI). Ameriprise’s failure to ensure that its customers investing in AIS satisfied the issuers’ prospectus suitability standards constitutes a failure to reasonably supervise pursuant to N.J.S.A. 49:3-58(A)(2)(XI). Ameriprise’s failure to ensure that its customers investing in AIS satisfied Ameriprise’s WSPS constitutes a failure to reasonably supervise pursuant to N.J.S.A. 49:3-58(A)(2)(XI). Ameriprise’s failure to calculate correctly customer’s liquid net worth constitutes a failure to make and keep accurate books and records pursuant to N.J.S.A. 49:3-59(B). Ameriprise’s failure to verify changes in customers’ financial information that enabled AL transactions to be completed constitutes a failure to make and keep accurate books and records pursuant to N.J.S.A. 49:3-59(B). Ameriprise’s failure to document accurately AL transactions constitutes a failure to make and keep accurate books and records pursuant to N.J.S.A. 49:3-59(B). Pursuant to N.J.S.A. 49:3-70.1, each violation of the securities law described above constitutes a basis for the assessment of a civil monetary penalty against Ameriprise.
Fined $5,000 for Alleged Supervisory Failures In Promptly Informing The State Administrator In Terminating Registered Salespersons (Docket/Case No. 17SEC003)
Overview from FINRA’s Disciplinary Office:
The State of North Carolina alleged that between 2016 and 2017, Ameriprise Financial Services, Inc. (“Ameriprise”) violated N.C. Gen. Stat. §78A-36(B) and 18 NCAC 06A. 1408(B), when it failed to promptly notify the State Administrator of termination of certain registered salesperson; 18 NCAC 06A.1402(E) when it allowed two of its salespersons to be registered with more than one dealer; and N.C. Gen. Stat. §78A-39(A1)(2)(A) when it failed to reasonably implement its written supervisory procedures to facilitate maintenance of registrations in compliance with the North Carolina laws.
Fined for Alleged Supervisory Failures In Overseeing A Representatives (Docket/Case No. R-2018-0070: R-2018-0071)
Overview from FINRA’s Disciplinary Office:
On or about April 20, 2018, Ameriprise filed applications seeking registration of Vincent Petrangelo (CRD 2866580) and Daryl Devillier (CRD 4069344) as BD agents in Massachusetts. Petrangelo is the subject of 7 creditor compromises that were written off, 2 judgment liens that were satisfied and 5 customer complaints alleging breach of fiduciary duty, churning, unauthorized trading and suitability issues. Devillier is the subject of 6 customer complaints alleging unauthorized trading, improper use of discretion, suitability issues, churning, negligence, breach of contract and breach of fiduciary duty. As a result of the above-stated CRD disclosure incidents, and pursuant to the undertakings, the division is placing conditions on Petrangelo’s and Devillier’s registrations as BD agents of Ameriprise in Massachusetts.
Fined $115,000 for Allegedly Selling Non-Traded REITs
Overview from FINRA’s Disciplinary Office:
The State alleged that between January 1, 2008 and December 31, 2014 Ameriprise violated California Code of Regulations, Title 10, Sections 260.218.2 and 260.218.4 when it sold non-traded REITs, through its California representatives, on at least 90 occasions by failing to implement an adequate supervisory system for and enforcing its written procedures to supervise these activities.
Fined $4,500,000 for Alleged Supervisory Failures In Safeguarding Retail Investor Assets Against Misappropriation By Firm’s Representatives (Docket/Case No. 3-18642)
Overview from FINRA’s Disciplinary Office:
SEC Admin Release 34-83848, IA Release 40-4985 / August 15, 2018: the Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to section 15(B) of the Securities Exchange Act of 1934 (“Exchange Act”) and sections 203(E) and 203(K) of the Investment Advisers Act of 1940 (“Advisers Act”) against Ameriprise Financial Services, Inc. (“Ameriprise” or “respondent”).
The commission finds that this matter concerns the failure of Ameriprise, a dually-registered investment adviser and broker-dealer, to adopt and implement policies and procedures reasonably designed to safeguard retail investor assets against misappropriation by the firm’s representatives. Ameriprise provides investment advisory and brokerage services to advisory clients and brokerage customers (together, “the clients”) through a national network of approximately 9,700 representatives.
From 2011 through 2014, as part of its compliance and supervisory systems, Ameriprise employed certain automated surveillance tools to prevent and detect whether a representative may have engaged in fraud by misappropriating funds from a client account. One system did not function properly and a second faced limitations, thereby preventing Ameriprise from detecting the misappropriation of over $1 million in client funds by five representatives.
The first, known as the fraud early detection system (“FEDS”), was intended, among other things, to identify situations where a representative attempted to change the address associated with a client’s account to an address controlled by the representative (such as his home or business address). Ameriprise considered attempts to replace a client’s address with an address controlled by a representative to be suspicious and indicative of a possible attempt to improperly gain control of the client’s account and misappropriate funds. However, because of a technical error that went undetected until December 2013, FEDS did not function properly.
The second, an automated transaction-based analysis tool (hereinafter “analysis tool”), was intended to identify, among other things, situations where a representative attempted to direct a cash disbursement from a client account to an address controlled by a representative. Ameriprise viewed such a money movement as an indicator that a representative could be engaged in fraudulent activities. However, because of a limitation in its design, with respect to cash disbursements via check, the analysis tool was unable to detect certain unauthorized disbursements from client accounts to addresses associated with the representative. In addition, the analysis tool was not utilized to detect fraudulent money movements where the disbursement was made by wire transfer. Ameriprise relied on a manual process to detect wire transfers to external accounts controlled by a representative. On multiple occasions, Ameriprise did not detect the fraudulent transfer of funds from client accounts to destinations that were controlled by its representatives.
The five representatives at issue were terminated by Ameriprise for misappropriating client funds (the “terminated representatives”). In violation of their fiduciary duties under the Advisers Act to their clients, the terminated representatives committed numerous unauthorized acts, including forging client documentation, making unauthorized address changes, and/or submitting requests to disburse client funds without their clients’ knowledge or approval. As a result, Ameriprise violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder, and failed reasonably to supervise the terminated representatives with a view to preventing and detecting violations of Federal Securities Laws.
Fined $495,000 for Alleged Supervisory Failures Allowing Agents To Engage in Dishonest and Unethical Practices (Docket/Case No. 2015793 and 20167368)
Overview from FINRA’s Disciplinary Office:
The State alleged that between 2009 and 2015 Ameriprise violated S.C. Code Ann. § 35-1-412(D)(13) and in particular, S. C. Code of Regulations § 13-501(B)(6), by failing to reasonably supervise three agents who engaged in dishonest and unethical practices through recommendations of unsuitable securities and strategies to their customers and through the use of fictitious account information in order to execute transactions which would otherwise be prohibited.
Fined $230,000 for Allegedly Unfairly Selling More Expensive Share Classes To Some Retirement Plan Customers Without Verifying Eligibility For Cheaper Options (Docket/Case No. 3-18381)
Overview from FINRA’s Disciplinary Office:
SEC Admin Releases 33-10462, 34-82792, IA Release 40-4862 / February 28, 2018: The Securities and Exchange Commission considered it appropriate and in the public interest that public administrative proceedings be instituted against Ameriprise Financial Services, Inc. (“Ameriprise” or “respondent”).
On the basis of this order and respondent’s offer, the Commission finds that Ameriprise disadvantaged certain retirement plan customers (“eligible customers”) by failing to ascertain that they were eligible for a less expensive share class, and recommending and selling them more expensive share classes in certain open-end registered investment companies (“mutual funds”) when less expensive share classes were offered to these eligible customers by Ameriprise on its platform. Ameriprise did so without disclosing that it would receive greater compensation from the eligible customers’ purchases of the more expensive share classes. Eligible customers did not have sufficient information to understand that Ameriprise had a conflict of interest resulting from compensation it received for selling the more expensive share classes. Specifically, Ameriprise recommended and sold these eligible customers Class A shares with an up-front sales charge or Class B or Class C shares with a back-end Contingent Deferred Sales Charge (“CDSC”) (a deferred sales charge the purchaser pays if the purchaser sells the shares during a specified time period following the purchase) and higher ongoing fees and expenses, when these eligible customers were eligible to purchase load-waived Class A shares. Ameriprise omitted material information concerning its compensation when it recommended the more expensive share classes to these eligible customers. Because Ameriprise did not ascertain these customers’ eligibility for load-waived A shares, it did not disclose to eligible customers that the purchase of the more expensive share classes would negatively impact their overall return, in light of the different fee structures for the different fund share classes. In making those recommendations of more expensive share classes while omitting material facts, Ameriprise willfully violated Sections 17(A)(2) and 17(A)(3) of the Securities Act.
Fined $1,750,000 for Allegedly Providing Misstatements Concerning Inflated Performance Of Fsquared’s Alphasector Strategies (Docket/Case No. 3-18301)
Overview from FINRA’s Disciplinary Office:
SEC Admin Release 34-82244, IA Release 40-4822 / December 8, 2017: the Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to section 15(B) of the Securities Exchange Act of 1934 (“Exchange Act”) and sections 203(E) and 203(K) of the Investment Advisers Act of 1940 (“Advisers Act”) against Ameriprise Financial Services, Inc. (“respondent” or “Ameriprise”).
The Commission finds that this matter arises from misstatements made by registered investment adviser Ameriprise to certain of its advisory clients concerning F-squared Investments, Inc.’s (“FSquared”) materially inflated, and hypothetical and back-tested, performance track record for its Alphasector strategies.
Alphasector strategies are sector rotation strategies based on an algorithm that yields a “signal” indicating whether to buy or sell nine industry exchange-traded funds (“ETFs”) that together made up the industries in the S&P 500 Index. Between December 2010 and January 2015, Ameriprise advised clients in certain separately managed accounts to invest in certain Alphasector strategies. Ameriprise’s assets under management relating to F-Squared’s Alphasector strategies grew quickly, with assets under management increasing from approximately $11.6 million at the end of 2010 to more than $3.7 billion by September 30, 2013.
From December 2010 through October 2013, in certain client presentations, marketing materials, and other communications, Ameriprise negligently relied on misrepresentations made by F-Squared and falsely stated that: (A) the Alphasector strategies had a history that dated back to April 2001 and had been in use since then; and (B) the track record had significantly outperformed the S&P 500 index from April 2001 to September 2008. In fact, no F-Squared or other client assets had tracked the strategy from April 2001 through September 2008. In addition, F-Squared miscalculated the historical performance of Alphasector from April 2001 to September 2008 by incorrectly implementing signals in advance of when such signals actually could have occurred. As a result of this inaccurate compilation of historical data by F-Squared, Ameriprise advertised the Alphasector strategies by using hypothetical and back-tested historical performance that was inflated substantially over what performance would have been if F-Squared had applied the signals accurately. Ameriprise also failed to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder, as required by Section 206(4) of the Advisers Act and Rule 206(4)-7. Specifically, Ameriprise failed to adopt and implement policies and procedures reasonably designed to ensure: (A) the accuracy of performance information contained in advertisements that it directly or indirectly published, circulated, or distributed where the performance information came from third-party sources and (B) the retention of books and records necessary to support the basis for performance information in advertisements directly or indirectly published, circulated, or distributed by Ameriprise.
Ameriprise likewise failed to make and keep true, accurate and current records or documents necessary to form the basis for or demonstrate the calculation of the performance or rate of returns that it published, circulated, and distributed, as required by Section 204 of the Advisers Act and Rule 204-2(A)(16) thereunder.
Respondent willfully violated Sections 204(A), 206(2), and 206(4) of the Advisers Act and Rules 204-2(A)(16), 206(4)-1(A)(5), and 206(4)-7 thereunder.
Fined $500 for Alleged Supervisory Failures In Timely Reporting Administrative Actions (Docket/Case No. Corporate License 1000001922)
Overview from FINRA’s Disciplinary Office:
Applicant violated North Carolina General Statute § 58-33-46(A)(2) by failing to timely report an administrative action taken by another jurisdiction.
Fined $500 for Alleged Supervisory Failures In Timely Reporting Administrative Actions (Docket/Case No. 3308)
Overview from FINRA’s Disciplinary Office:
Applicant violated 18 Del. C. § 1719 by failing to timely report an administrative action taken by another jurisdiction.
Fined $500 for Alleged Supervisory Failures In Reporting Administrative Actions (Docket/Case No. 16-0081-DEN)
Overview from FINRA’s Disciplinary Office:
Oklahoma Insurance Department alleged that the applicant failed to report an administrative action on its licensing application and failed to timely report an administrative action in violation of 36 O.S. 1435.13(A)(1) and 36 O.S. 1435.18(A).
Fined $100 for Alleged Supervisory Failures In Reporting Administrative Actions (Docket/Case No. 2016-5514-INS)
Overview from FINRA’s Disciplinary Office:
Louisiana Department of Insurance alleged that the applicant failed to timely report an administrative action and failed to disclose an administrative action on a licensing application in violation of LA. R.S. 22:1563(A) and LA. R.S. 22:1554(A)(2).
Fined $40,000 for Alleged Supervisory Failures In Timely Reviewing and Approving Monthly Form Regarding Advertising Practices (Docket/Case No. 62591-S)
Overview from FINRA’s Disciplinary Office:
Florida Office of Financial Regulation (“Office”) alleged that Ameriprise Financial Services, Inc. (“Ameriprise”) violated Rule 69W-600.13(1)(H)1., F.A.C. and NASD Rules 3010(B)(1) and 3010(C) by failing to establish, maintain and enforce written supervisory procedures to ensure a supervisor timely reviewed and approved a monthly form concerning advertising practices for a month and not detecting improper forms when conducting an inspection of the branch. The office alleged that Nicholas Vizzi (“Vizzi”) violated 69W-600.013(2)(H), F.A.C. and FINRA Rule 2010 by improperly reviewing and approving forms in his supervisory role.
Fined $15,000 for Alleged Supervisory Failures Allowing An Unlicensed Agent to Give Advice To Client (Docket/Case No. COM2015-0001)
Overview from FINRA’s Disciplinary Office:
AFSI agent Richard Ewing was not licensed in NH when he gave advice to one client living in Campton NH part of the year. Ewing lives and works in Florida and the client travels to Florida parts of the year.
Fined $500 for Alleged Supervisory Failures In Timely Filing Applications (Docket/Case No. 189737-16-AG)
Overview from FINRA’s Disciplinary Office:
Florida Department of Financial Services alleged that applicant failed to timely file application for insurance agency license with the Department as required by Florida Ins. Stat. Sect. 626.112(7)(A).
Fined $40,000 for Allegedly Offering and Selling Non-Traded Real Estate Investment Trusts (Docket/Case No. S-14-1575-15-SC01 S-14-1575-16-CO02)
Overview from FINRA’s Disciplinary Office:
On February 23, 2016, The Securities Division entered a statement of charges and notice of intent to enter order to cease and desist, to impose fines, suspend securities salesperson registration, and to charge costs (“statement of charges”) against Lori Cousineau weaver (“Cousineau Weaver”) and her former firm, Ameriprise Financial Services, Inc. (“Ameriprise”)(Collectively, “respondents”).
The statement of charges alleges that the respondents and offered and sold Non-Traded Real Estate Investment Trusts (“REITs”) to customers, including many senior citizens, through unsuitable recommendations and failed to disclose complete information regarding the fees, commissions, and illiquidity of these products. The Securities Division further alleges that Ameriprise failed to adequately supervise Cousineau Weaver.
The statement of charges gives notice of the Securities Division’s intent to suspend Cousineau Weaver’s securities salesperson registration, and to impose fines and charge costs. The respondents have the right to request a hearing on the statement of charges.
Fined $10,000 for Alleged Supervisory Failures (Docket/Case No. SEC-2015-00061)
Overview from FINRA’s Disciplinary Office:
Rules 21 VAC 5-20-260 B & 21 VAC 5-20-260D(2)
Fined $80,000 for Allegedly Providing Inaccurate Policies and Procedures (Docket/Case No. C-201300009)
Overview from FINRA’s Disciplinary Office:
The State of New Hampshire Bureau of Securities Regulation (The “Bureau”) alleged that Ameriprise Financial Services, Inc. (“AFSI”) agents licensed in New Hampshire were provided with policies and procedures that were inaccurate and did not clearly outline applicable telemarketing restrictions or the exceptions to them. The Bureau also alleged that AFSI failed to maintain accurate telemarketing policies and procedures and therefore did not maintain or enforce policies and procedures that adequately provided for review of the telemarketing activities of its agents licensed in New Hampshire. AFSI violated N.H. RSA 421-B.
Fined $400,000 for Allegedly Selling Non-Traded REITs (Docket/Case No. E-2013-0045)
Overview from FINRA’s Disciplinary Office:
Ameriprise, through its registered representatives, sold non-traded REITs in excess of Massachusetts 10% maximum concentration limits imposed by non-traded REIT prospectuses and sold non-traded REITs in excess of Massachusetts net worth and annual income requirements imposed by non-traded REIT prospectuses.
Fined $50,000 for Alleged Supervisory Failures In Overseeing Representatives (Docket/Case No. 2010-0308)
Overview from FINRA’s Disciplinary Office:
In connection with the facts described in the statement of facts contained in this order, incorporated herein by reference, respondent failed to reasonably supervise former securities agent/investment adviser representative Christopher G. Coulter, within the meaning of Section 11-412(A)(10) of the Securities Act, which is grounds for the revocation of respondent’s broker-dealer registration in the State of Maryland, and respondent violated Section 11-411(D) of the Securities Act (relating to updating Form U4).
Fined $175,000 for Allegedly Recommending And Effecting Unsuitable Variable Annuity Transactions (Docket/Case No. 2007009442501)
Overview from FINRA’s Disciplinary Office:
The Financial Industry Regulatory Authority (“FINRA”) alleged that from March 2005 through June 2006, H&R Block Financial Advisors, Inc. (“H&R Block”), N/K/A Ameriprise Financial Services, Inc. (“AFSI”), recommended and effected 38 unsuitable variable annuity transactions involving 17 customers through one of its financial advisors. FINRA also alleged that H&R Block failed to retain transaction detail reports and annuity suitability review forms in connection with 11 variable annuity transactions.
Fined $4,500 for Allegedly Employing Agent Who Conducted Business On Behalf Of AASI Before Being Registered (Docket/Case No. 10-0129 CA)
Overview from FINRA’s Disciplinary Office:
The Office of The Indiana Secretary of State, Securities Division (“Division”) alleged that from January 29, 2009 to February 24, 2009, Ameriprise Advisor Services, Inc. (“AASI”), F/K/A H&R Block Financial Advisors, Inc. (“H&R Block”), N/K/A Ameriprise Financial Services, Inc. (“AFSI”), employed and/or associated with an agent who transacted business in the state on behalf of AASI prior to the effectiveness of his registration as an agent with AASI in the State.
Fined $200,000 for Alleged Supervisory Failures In Overseeing Sales of Reverse Convertible Notes (Docket/Case No. 2007011933101)
Overview from FINRA’s Disciplinary Office:
The Financial Industry Regulatory Authority (“FINRA”) alleged that from January 2004 through December 2007, H&R Block Financial Advisors, Inc. (“H&R Block”), F/K/A Ameriprise Advisor Services, Inc., N/K/A Ameriprise Financial Services, Inc. (“AFSI”), failed to establish and implement an adequate system and written procedures for the supervision of sales of reverse convertible notes (“RCNS”) that resulted in H&R Block being unable to detect and respond to indications of potential over-concentrations of RCNS in retail customer accounts.
Fined $400,000 for Alleged Supervisory Failures Allowing Agents To Engage in Dishonest and Unethical Practices (Docket/Case No. 2009-AH-73)
Overview from FINRA’s Disciplinary Office:
The Kentucky Division of Securities alleged that an Ameriprise Financial Services, Inc. (AFSI) agent established margin accounts for several clients without their knowledge and consent, convinced clients to mortgage their homes for investment purposes, and forged client documents resulting in dishonest and unethical practices. AFSI also failed to reasonably supervise this agent.
Fined $8,650,000 for Alleged Undisclosed Compensation In Connection With Offering and Selling REITs (Docket/Case No. 3-13544)
Overview from FINRA’s Disciplinary Office:
SEC Admin Releases 33-9051, 34-60279, July 10, 2009: The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to section 8A of the Securities Act of 1933 (“Securities Act”) and Sections 15(B) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) against Ameriprise Financial Services, Inc. (“Ameriprise” or “respondent”) – Ameriprise willfully violated: Section 5 (A), 17(A)(2) and 17(A)(3) of the Securities Act of 1933, Securities Exchange Act of 1934 Rule 10B-10 – these proceedings arise out of Ameriprise’s receipt of approximately $30.8 million in undisclosed compensation in connection with Ameriprise’s offer and sale to its brokerage customers of certain Real Estate Investment Trusts (“REITs”) between 2000 and May 2004 (The “relevant period”). Ameriprise demanded this undisclosed compensation, which it referred to as “revenue sharing,” in exchange for including the REITs on Ameriprise’s brokerage platform. This matter also involves Ameriprise’s unlawful offer and sale of at least $100 Million worth of shares of one such REIT to its brokerage customers in the absence of an effective registration statement.
Fined $250,000 for Alleged Supervisory Failures In Delivering Investment Plans To Clients (Docket/Case No. CO-2009-0009)
Overview from FINRA’s Disciplinary Office:
On April 23, 2009, the Alabama Securities Commission, in conjunction with Georgia Commissioner of Securities, entered into a consent order resolving an inquiry into Ameriprise’s failure to deliver a number of investment plans to clients in both Alabama and Georgia. Ameriprise made rescission to the clients as part of the resolution to this inquiry. As part of the consent order, Ameriprise paid $250,000 to the State of Alabama for administrative assessment and $75,000 to the Alabama Securities Commission for investigative costs.
Fined $1,750,000 for Allegedly Violating Broker-Dealer Conduct Provisions (Docket/Case No. 2008-03-25)
Overview from FINRA’s Disciplinary Office:
Respondent Ameriprise Financial Services, Inc. violated the broker-dealer conduct provisions of the PA Securities Act of 1972.
Fined $750,000 for Allegedly Engaging In Fraudulent Business Practices (Docket/Case No. SEC-2007-00083)
Overview from FINRA’s Disciplinary Office:
It is alleged that during the period January 1, 2001, through March 31, 2002, Ameriprise Financial Services, Inc. (“Defendant”): (1) violated Section 13.1-503 A (2) of the Virginia Securities Act (“Act”), Section 13.1-501 ET Seq. of the Code of Virginia by engaging in a transaction, practice, or course of business which operates or would operate as a fraud or deceit: (2) violated Section 13.1-503 B of the Act by making an untrue statement of a material fact, or omitting to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; (3) violated Securities Rule 21 VAC 5-80-200 A 1 by recommending to clients to whom investment supervisory, management or consulting services are provided the purchase, sale or exchange of any security without reasonable grounds to believe that the recommendation is suitable for the clients on the basis of information furnished by the clients; and (4) violated Securities Rule 21 VAC 5-80-200 A 11 by failing to disclose to clients in writing before any advice is rendered any materical conflict of interest relating to the investment advisor or federally covered advisor or any of its employees which could reasonably be expected to impair the rendering of unbiased and objective advice.
Fined $10,000 for Alleged Supervisory Failures In Properly Reporting Corporate Bond Transactions (Docket/Case No. 2007007118101)
Overview from FINRA’s Disciplinary Office:
NASD Rules 2110 and 6230 – Respondent failed to properly report corporate bond transactions in the trade reporting and compliance engine (TRACE) reporting system.
Fined $1,500,000 for Alleged Supervisory Failures In Giving Material Information Regaring Its Mutual Funds (Docket/Case No. 0500280)
Overview from FINRA’s Disciplinary Office:
The Illinois Securities Department alleged that Ameriprise did not provide adequate disclosures of material information regarding its proprietary mutual funds, including the existence of certain revenue-sharing agreements, financial incentives to sell the funds, and the limited transferability of those funds to other brokerage/advisory firms. The Department also alleged that Ameriprise, through its representatives, placed customers into its proprietary funds when other, better performing, funds were available during the years of 2000 through 2003. This matter was resolved through settlement (see comments, below).
Fined $75,000 for Alleged Supervisory Failures Allowing Advisor To Take Money From AFSI Clients (Docket/Case No. C0700247)
Overview from FINRA’s Disciplinary Office:
Former Ameriprise Financial Services, Inc. (“AFSI”) advisor and franchise owner, Oscar Donald Overbey, Jr. (“Overbey”), took money from current and former AFSI customers by engaging in activities away from the company. Upon discovering Overbey’s misconduct, AFSI suspended Overbey and contacted the Illinois Securities Department to self-disclose Overbey’s activities. The Department alleged that neither AFSI nor Overbey’s supervisors, engaged in oversight that uncovered Overbey’s misconduct.
Fined $3,250,000 for Alleged Supervisory Failures In Reporting Compliance Issues (Docket/Case No. INV06-003)
Overview from FINRA’s Disciplinary Office:
Respondent violated a prior order of the Bureau dated July 2005. The prior order required the respondent to cease and desists and to report compliance issues to the bureau and the respondent failed to do so. Respondent failed to report forgery and improper financial plan closures among other infractions. Respondent failed to supervise its agents. Respondent withheld and concealed information it was required to report to the bureau. Action was also taken against Ameriprise Financial, Inc. and Larry Post, the firm’s group VP for NH.
Fined $40,000 for Alleged Supervisory Failures In Overseeing Representatives (Docket/Case No. ENSC-01007)
Overview from FINRA’s Disciplinary Office:
Failed to reasonably supervise the activities of two registered reps in the State of GA.
Fined $150,000 for Alleged Supervisory Failures In Overseeing Representative (Docket/Case No. S-06-0337)
Overview from FINRA’s Disciplinary Office:
State alleged that Ameriprise Financial Services, Inc. failed to adequately supervise former advisor, J.R. Jones, in connection with outside business activities, allegedly resulting in selling away.
Fined for Alleged Supervisory Failures Allowing a Representative to Sell Unsuitable Investments and Misappropriate of Client Assets (Docket/Case No. E-2006-0047)
Overview from FINRA’s Disciplinary Office:
The Division alleged that Ameriprise Financial Services, Inc. failed to adequately supervise Shane Selewach, which resulted in Selewach’s selling unsuitable investments to clients and misappropriating client assets. The Division alleged these actions violated certain provisions of the Massachusetts Uniform Securities Act, M.G.L.C. 110A (“Act”) and related regulations, 950 C.M.R. 10.00 ET Seq.
Fined $1,250,000 for Alleged Supervisory Failures Allowing a Representative to Forge Client Signatures and Misappropriated Client Funds (Docket/Case No. S-20427-06-0526)
Overview from FINRA’s Disciplinary Office:
The Arizona Corporation Commission-Securities Division (The “Commission”) alleged that Ameriprise Financial Services, Inc. (“Ameriprise”) violated A.R.S. 44-1961(A)(12) by failing to reasonably supervise former financial advisor, Kenneth Feldhacker (“Feldhacker”), who forged client signatures and misappropriated client funds.
Fined $23,157.14 for Alleged Supervisory Failures Allowing A Representative To Conduct Unlicensed Sales Activity (Docket/Case No. 05-XY-008)
Overview from FINRA’s Disciplinary Office:
Ameriprise (F/K/A American Express) failed to supervise Robert Yeager CRD#4023419 enabling him to conduct unlicensed sales activity with one Colorado resident from at least March 2002 to August 2004.
Fined $1,000,000 for Alleged Supervisory Failures In Overseeing Financial Advisor’s Misappropriation of Client Funds (Docket/Case No. S-20427A-05-0788)
Overview from FINRA’s Disciplinary Office:
The State of Arizona alleged that American Express Financial Advisors Inc. failed to reasonably supervise a financial advisor’s misappropriation of client funds through redemptions in securities accounts to pay for advice fees. This violated A.R.S. 44-1961(A)(12).
Fined $2,000,000 for Alleged Supervisory Failures Allowing Inappropriate Market Timing (Docket/Case No. SE2502055/DPK)
Overview from FINRA’s Disciplinary Office:
The Minnesota Department of Commerce (MDOC) alleged that American Express Financial Corporation (AEFC) allowed inappropriate market timing to occur by failing to have written policies and procedures and failing to properly supervise its employees. MDOC also adopted and incorporated by reference SEC allegations that AEFC failed to (1) adequately disclose market timing activities by allowing certain identified market timers to continue to market time contrary to disclosure in AXP funds’ and variable annuity products’ prospectuses; and (2) implement procedures to detect and prevent market timing in 401(k) plans for employees of AEFC and related companies and failed to adequately disclose that there were no such procedures. MDOC also alleged that American Express Financial Advisors Inc. (AEFA) failed to (1) in certain transactions, determine suitability of class of mutual fund shares to be purchased; (2) establish, maintain and enforce supervisory and compliance policies and procedures to ensure appropriate mutual fund share class recommendations; (3) reasonably establish and maintain supervisory systems to comply with suitability obligations for 529 plan sales; and (4) observe high standards of commercial honor and just and equitable principles of trade in business conduct by allowing some transactions where recommendations to or purchase of mutual funds was made on the basis of brokerage commissions received or expected to be received by the firm from any source. As a result, AEFA and AEFC violated Minn. Stat. 45.027 (2004), Minn. Stat. 80A.07 SUBD. 1(10) (2004) and Minn. R. 2875.0910 (2003).
Fined $15,000,000 for Alleged Supervisory Failures In Disclosing Material Facts To Clients (Docket/Case No. 3-12115)
Overview from FINRA’s Disciplinary Office:
Sec Administrative Proceeding Releases 33-8637 and 34-52861, December 1, 2005; this matter arises from AEFA’s failure to adequately disclose certain material facts to its brokerage customers in the offer and sale of mutual fund shares and interests in college savings plans established under section 529 of the Internal Revenue Code (“529 Plans”). Specifically, AEFA did not adequately disclose to its brokerage customers information concerning revenue sharing agreements it had with certain mutual fund families. Between January 2001 and August 2004, AEFA did not adequately disclose material information concerning its conflicts of interest in offering and selling shares of twenty-seven preferred mutual fund families whose affiliates made revenue sharing payments to AEFA in exchange for, among other things, inclusion on AEFA’s brokerage platform. Between April 2003 and August 2004, AEFA’s disclosures concerning these conflicts improved, but were still deficient in certain respects. From October 2003 to the present, AEFA also has not adequately disclosed certain material facts about its conflicts of interest in the offer and sale of interests in nine 529 plans concerning revenue sharing payments made to AEFA by affiliates of the nine fund families that administered the 529 plans.
Fined $5,000,000 for Alleged Supervisory Failures Allowing Financial Advisor to Engage In Fraudulent Scheme
Overview from FINRA’s Disciplinary Office:
The allegations related to a fraudulent scheme conducted by a former independent franchisee financial advisor, Arthur Davidson, involving Davidson’s forgery of financial advisory services agreements and mutual fund redemption forms of a number of clients. The Bureau found that, pursuant to N.J.S.A. 49:3-58 and 67, American Express Financial Advisors Inc. (AEFA) failed to establish and/or enforce procedures necessary to detect the activities of Davidson and other financial advisors who may be identified as having engaged in similar conduct, which constitutes a failure to supervise.
Fined $5,000,000 for Allegedly Committing Fraud (Docket/Case No. INV04-122)
Overview from FINRA’s Disciplinary Office:
The Bureau alleged that during the time period of 1999 through 2003, the respondent committed fraud by failing to disclose to its fee paying advisory clients several conflicts of interest that permeated the investment advisor relationship and the sale of proprietary and specially selected mutual funds including the following: Revenue sharing payments, directed brokerage payments, differential in compensation, and pressure to sell proprietary products. Further, the Bureau alleged that respondent’s conduct acted as a fraud on the investor in that the respondent’s advice was predetermined based on its focus to sell proprietary mutual funds and a model portfolio made up of all American Express mutual funds which favored American Express and which was not in the best interest of its clients.
Fined $20,000 for Alleged Supervisory Failures In Making Corrective Actions Regarding Problems With Public Customer Accounts Showing Up On Multiple Redemption/Purchase Reports (Docket/Case No. C8A040126)
Overview from FINRA’s Disciplinary Office:
NASD Conduct Rules 2110 and 3010. Respondent firm failed to adequately supervise registered representatives with respect to his handling of the accounts of public customers who were married to each other. During a 14 month period of March 2000 through May 2001, registered representatives were assigned to four consecutive supervisors who failed to take corrective action when the accounts of public customers appeared on numerous redemption/purchase reports that were in use at that time. The redemption/purchase reports disclosed redemptions or mutual funds and subsequent purchases of mutual funds within a 30-day period. At least 11 redemption/purchase reports were generated during that 14-month period for the accounts of public customers that reflected unsuitable trading through the purchases and sales of different share funds of different mutual fund families, commonly referred to as mutual fund switching. The redemption/purchase reports that member firms prepared for the supervisory review of significant activity in customer accounts contained inaccuracies and were difficult to decipher, severely limiting their usefulness as a supervisory tool.
Fined $32,000 for Alleged Supervisory Failures In Informing Clients Of Securities Recommendations That Could Be Influenced By AEFA’s Wrap Exit/Purchase Policy (Docket/Case No. 0153-S-8/04)
Overview from FINRA’s Disciplinary Office:
The State of Florida alleged that AEFA did not disclose to clients that its financial advisors’ securities recommendations could be affected by AEFA’s wrap exit/purchase policy, which imposed assessments on its financial advisors for certain ineligible transfers of American Express mutual funds into managed portfolio products or wrap accounts. At the same time, the client fee was reduced for one year on the entire account balance. The policy was applied uniformly to both proprietary and non-proprietary products.
Fined $700,000 for Alleged Supervisory Failures In Complying With Article V Reporting Obligations (Docket/Case No. CAF040090)
Overview from FINRA’s Disciplinary Office:
Article V, Sections 2(C) and 3(B) of NASD’s By-laws, and NASD Rules 2110 and 3010 – American Express Financial Advisors Inc. (“respondent firm”) filed at least 770 late amendments to forms U4 and U5, which represented approximately 44% of the required amendments relating to reportable customer complaints, terminations, regulatory actions, and criminal disclosures. During the relevant period, the respondent firm’s supervisory system and procedures were not reasonably designed to achieve compliance with its Article V reporting obligations.
Fined $400,000 for Alleged Supervisory Failures In Filing Advertising and Sales Literature With NASD (Docket/Case No. CAF040072)
Overview from FINRA’s Disciplinary Office:
NASD Conduct Rules 2110, 2210(B), 2210(C), and 3010 – respondent member failed to file in a timely manner with NASD advertising and sales literature it used with the investing public; used several pieces of advertisements and sales literature with the investing public prior to obtaining the required written approval by a firm principal; and, failed to establish, maintain and enforce a supervisory system and procedures reasonably designed to achieve compliance with federal securities laws and NASD Rules, NASD’s advertising rules in that they failed to consistently monitor and enforce policies and procedures relating to advertising and sales literature.
Fined $300,000 for Alleged Supervisory Failures In Maintaining Records (Docket/Case No. C05040017)
Overview from FINRA’s Disciplinary Office:
Section 17 of the Securities Exchange Act of 1934, Sec Rule 17A-4, NASD Rules 2110, 3110 – Respondent member failed and neglected to maintain certain records and although the firm was able to reconstruct the records from data electronically stored, the electronic storage did not preserve records in a non-rewritable, non-erasable format as required by Sec Rule 117A-4(F). The firm failed to preserve in an acceptable format copies of account statements distributed to all customers, copies of letters sent to customers confirming changes of address, and copies of confirmations of purchases and sales of shares of the firm’s proprietary mutual funds.
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Fined $110,000 for Alleged Supervisory Failures In Properly Disclosing Information to Clients (Docket/Case No. CO-03-6788-S)
Overview from FINRA’s Disciplinary Office:
3/29/2004 Consent Order alleged that the firm had acted improperly by not disclosing to clients that representatives of the firm were being penalized $1,000 per occurrence if they moved client funds held less than 30 months from a mutual fund to a wrap account. The firm has since discontinued that policy. In addition, the consent order alleged that American Express Financial Advisors, Inc. had provided inaccurate information to the agency.
Fined $1,853,347 for Allegedly Selling Shares Without Providing Eligible Customers With Breakpoint Discounts (Docket/Case No. 3-11395)
Overview from FINRA’s Disciplinary Office:
SEC Administrative Release No. 33-8365, 34-49227, File No. 3-11395, dated February 12, 2004; During 2001 and 2002 (The “relevant period”), respondent sold shares issued by mutual funds without providing certain customers with the reductions in front-end loads, or sales charges, also known as “breakpoint” discounts, described in the prospectuses of the funds. According to data submitted to NASD by respondent, respondent is estimated to have failed to give certain customers breakpoint discounts totaling approximately $3,706,693 during the relevant period. By failing to disclose to certain customers that they were not receiving the benefit of applicable breakpoint discounts, respondent violated Section 17(A)(2) of the Securities Act. Further, because respondent did not charge these customers the correct sales loads as set forth in the mutual funds’ prospectuses, and also did not disclose in confirmations the remuneration respondent received from the sales loads charged to these customers, respondent violated rule 10B-10 under the exchange act.
Fined $1,853,346.50 for Allegedly Selling Shares Without Providing Eligible Customers With Breakpoint Discounts (Docket/Case No. CAF040003)
Overview from FINRA’s Disciplinary Office:
NASD Conduct Rule 2110 – Respondent member sold shares issued by mutual funds without providing certain customers with the reduction in the front-end loads, or sales charges described in the prospectuses of the funds; failed to give its customers breakpoint discounts in 29.70% of eligible mutual fund transactions in 2001 and 2002, that resulted in missed breakpoints that would have reduced customers charges by at least $3,706,693 on their purchases of mutual fund shares with front-end loads during the relevant period.
Fined $350,000 for Allegedly Omitting Material Facts When Selling Variable Annuities (Docket/Case No. CAF020057)
Overview from FINRA’s Disciplinary Office:
NASD Rules 2110, 2310(A), 2310(B), 3010(A), 3010(A)(2), 3010(B)(1), 3110(A), IM-3110(B) – Without admitting or denying the allegations, the respondent member consented to the entry of findings that, through registered reps, omitted material facts when selling variable annuities into qualified plans – failed to orally disclose that variable annuities do not provide the benefit or advantage of tax deferred earnings when purchased in qualified plans, failed to orally disclose that tax deferral is not justification for purchasing variable annuities in a qualified plan; failed to explain costs and features of variable annuities, failed to differentiate adequately variable annuities from mutual funds; failed to address these issues adequately when training reps and omitted material facts regarding qualified annuities in disclosure documents and sales literature; through registered reps, recommended in certain instances the sale of variable annuities into qualified plans without having a reasonable basis for believing the recommendations were suitable and failed to determine that customers had a need for a benefit offered by a variable annuity, other than tax deferral, when recommending the purchase of the product; failed to take corrective action in a timely manner when it began to address appropriateness of selling variable annuities into qualified plans; failed to address adequately review of variable annuity and variable life insurance transactions, failed to provide representatives with adequate suitability guidelines, failed to obtain information critical in making a determination of suitability and conducting related supervisory reviews, information required for its books and records, information required to be obtained by the firm’s procedures; failed to have adequate procedures for variable product exchanges; failed to establish adequate procedures for review of customer account activity on a periodic basis or for the handling of customer complaints.
Fined $5,000 for Alleged Supervisory Failures In Responding To Department Requests Concerning Amendment of The Form U-4 On Time (Docket/Case No. SE2105455/LMD)
Overview from FINRA’s Disciplinary Office:
The Commissioner has advised American Express Financial Advisors, Inc (hereinafter ‘respondent’) that he is prepared to commence formal action pursuant to MN Stat45.027,Sub 7(2000) against respondent’s securities broker-dealer license based on allegations that respondent failed to respond in a timely manner to department requests concerning the amendment of the Form U-4 of their agent in violation of MN Stat45.027, Sub 1A(2000) and failed to require that their agent file correcting amendments to his U-4 in violation of MN Stat 80A.07 Sub 1(10)(2000).
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Fined $85,000 for Alleged Supervisory Failures Allowing Agent to Misappropriate $794,000 From Clients (Docket/Case No. AO-02-14)
Overview from FINRA’s Disciplinary Office:
AEFA failed to adequately supervise the activities of agent Rodney Lynn Belzer who misappropriated $794,600 from seven Missouri clients of AEFA during the period April 1998 to June 2000.
Fined $9,000 for Alleged Supervisory Failures Allowing Unregistered Agents To Engage In Offer and Sale of Securities (Docket/Case No. 00-021, CAF-1402)
Overview from FINRA’s Disciplinary Office:
Respondent had operated 9 multiple locations in Texas which were not properly registered as branch offices; respondent permitted agents to send out correspondence claiming they were registered representatives or financial advisors at a time when they were not registered, and permitted agents to engage in the offer and sale of securities while not registered and allowed agents to solicit the sale of securities in violation of its own internal procedures.
Fined $8,000 for Alleged Supervisory Failures Permitting Unregistered Individuals to Conduct Securities Business (Docket/Case No. C04000028)
Overview from FINRA’s Disciplinary Office:
NASD Rule 1120 and 2110 – respondent permitted five individuals to conduct securities business and to act in a registered capacity when each individual’s registration had lapsed for non-compliance with the regulatory element of the continuing education requirement.
Fined $10,000 for Allegedly Operating A Branch Without Registration (Docket/Case No. 2664-S-5/00)
Overview from FINRA’s Disciplinary Office:
American Express Financial Advisors, Inc. operated a branch office located at 6130 Paradise Point Drive, Miami, Florida without the benefit of registration.
Fined $125,000 for Alleged Supervisory Failures In Investigating Representative and Maintaining Records of Activities (Docket/Case No. S-03388A-00-000)
Overview from FINRA’s Disciplinary Office:
Failure to supervise salesman 09/97-07/99, AEFA RR Walter Elze ordered redemptions from customer SN’s Accounts on 52 separate occasions, totaling $226,000, via advisor-assisted telephone transactions. Most incurred penalties to SN. On only 1 occasion did AEFA question the activity in SN’s accounts. AEFA supervisory personnel were on notice that Elze was gambling & in debt to AEFA. AEFA was aware of complaints involving Elze but made no further investigation. Correspondence was received at Elze’s branch, from bank one, addressed to Walter Elze or SN. No investigation was conducted to determine why Elze had a joint bank account with SN. AEFA failed to maintain accurate books and records related to SN’s accounts and Elze’s activities.
Fined for Allegedly Misquoting Appropriate Premium Rates For An Automobile Insurance Policy (Docket/Case No. 7726)
Overview from FINRA’s Disciplinary Office:
Applicant (then known as IDS Financial Services Inc., a subsidiary of IDS Financial Corporation, now known as American Express Financial Corporation,)was accused of misquoting the appropriate premium rates for an automobile insurance policy.
Fined for Allegedly Using Material Inside Information In Connection With Securities Transactions
Overview from FINRA’s Disciplinary Office:
Applicant and its agent violated SEC. 10(B) of the Securities Exchange Act of 1934 by using material inside information in connection with securities transactions.
Fined $50,000 for Allegedly Conducting Business From Branch Offices Which Were Not Properly Registered According To Florida Statutes (Docket/Case No. 2811-5-4/99)
Overview from FINRA’s Disciplinary Office:
A review of pending branch office applications indicated that securities business may have been conducted from certain branch office locations with proper NASD branch registration but without benefit of proper registration of those branch offices as required by Florida Statutes.
Fined $22,450 for Allegedly Employing Unregistered Representatives (Docket/Case No. 106-04-98-006)
Overview from FINRA’s Disciplinary Office:
The Montana Securities Department alleged that applicant employed unregistered investment adviser representatives.
Fined $15,000 for Alleged Supervisory Failures In Overseeing Representatives and Employing An Unregistered Agent (Docket/Case No. 99-5118-S)
Overview from FINRA’s Disciplinary Office:
The firm allegedly 1) employed an unregistered investment adviser agent from 1992 to 3/1999; 2) failed to supervise Vincent M. Giaquinto who, from approx. 12/1989 to 2/1998, attempted to misappropriate customer funds earmarked for investment in mutual funds & insurance products by creating fictitious customer statements; and 3) failed to oversee the activities of 2 other agents who engaged in private securities transactions involving North American broadcasting securities.
Fined for Allegedly Employing An Unregistered Agent
Overview from FINRA’s Disciplinary Office:
IDS Financial Services Inc. allegedly employed an unregistered investment adviser agent.
Fined $5,000 for Alleged Supervisory Failures In Preventing Irregularities/Abuses Regarding The Review and Written Approval of Securities Transactions (Docket/Case No. SEC920094)
Overview from FINRA’s Disciplinary Office:
IDS Financial Services violated Rules 303B, 303D.2 and 303D.3 of the Virginia Securities Act between July 1986 and September 1988 when it failed to exercise diligent supervision over certain of its agents activities and failed to establish, maintain or to enforce adequate written procedures in areas to detect and prevent irregularities/abuses and pertaining to the prompt review and written approval of securities transactions by agents.
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Our attorneys have experience handling well over a thousand securities arbitration claims, and our law firm has successfully recovered over $25 million for our clients to date. We understand the stress that comes along with realizing that your financial advisor or brokerage firm has made poor decisions with your money.
We can help you, as we have helped hundreds of other clients in the past. We are happy to serve you as well as to provide you with a custom report of your advisor’s and your brokerage firm’s complaints.
