Ameriprise Financial: Complaints and Regulatory Fines
If you or someone you know has a complaint against an Ameriprise representative, call our law office at 212-203-9300 for a free and confidential consultation. We accept cases on contingency, which means that we are paid a legal fee only if we are able to successfully recover money on our client’s behalf.
Million Dollar Arbitration Award
When an Ameriprise Financial Services representative advised two retired schoolteachers to invest $1.03 million in three tenant-in-common products in 2008, the couple reportedly ended up losing “most of their life savings” according to their complaint against Ameriprise. The Financial Industry Regulatory Authority eventually ruled that Ameriprise failed to follow its supervisory protocols in connection to the investments, ordering the firm to pay an award of $1.17 million to the elderly customers.
That award, issued in 2014, marked just one instance of misconduct in a lengthy history for Ameriprise Financial Services. The Minnesota-based broker-dealer firm and its brokers have been accused of inappropriate investment recommendations, shady dealings, and outright theft from customer accounts. Its activities have resulted in arbitration awards to customers as well as intense regulatory scrutiny, including significant fines. In 2009, for example, a Securities and Exchange Commission complaint charged Ameriprise with failing to disclose to customers that it received millions of dollars in compensation for recommending certain real estate investment trusts. The complaint alleged that Ameriprise’s financial advisers provided biased advice to their customers, according to one SEC official, and went so far as to mislabel invoices as part of its practice of collecting undisclosed revenue sharing payments. It was ultimately ordered to pay $17.3 million to settle the charges.
Complaint: Excessive Mutual Fund Charges
As many as 1,791 Ameriprise Financial Services customers paid a cumulative $1.7 million in unnecessary sales charges on mutual fund investments thanks to the firm’s failures, the SEC charged in 2018 complaint against Ameriprise. According to the regulator’s findings, Ameriprise’s representatives sold retail retirement account customers higher-fee mutual fund share classes without attempting to determine whether they were eligible for less expensive share classes; it also failed to provide sales charge waivers, and failed to disclose the increased compensation it stood to receive from the more expensive products, which “would negatively impact the overall return on the customers’ investments.”
The SEC’s complaint, part of a series of actions targeting similar mutual fund sales violations by broker-dealer firms, censured Ameriprise and ordered the firm to pay a penalty of $230,000.
Ameriprise Fined More Than $1 Million Over Theft
Ameriprise Financial Services has been fined on multiple occasions for failing to supervise its representatives’ conversion (theft) of customer funds. One such complaint, in 2013, concerned its former representative Jennifer Guelinas. According to a disciplinary action barring her from the industry in 2011, Guelinas converted roughly $790,000 from two customers. She did so by allegedly forging the customers’ signatures on wire transfer request documents, then transferring the funds into her own bank accounts.
As FINRA found in 2013, Ameriprise Financial Services had no policies or procedures in place at the time “to detect or prevent multiple transmittals of funds going to third-party accounts, instead relying on a manual review of wire requests without the benefit of exception reports that could have helped to discern suspicious patterns.” The findings state further than Ameriprise missed red flags of Guelinas’ activities. For instance, it allegedly processed the forged wire transfer request forms, then directed the funds into her accounts “without any inquiries.” On three instances, FINRA states, the firm even denied the forged wire transfer requests—”including one for an apparent signature discrepancy”—only to process the when Guelinas resubmitted the requests later. The firm even processed a forged request and disbursed the funds to her account after terminating her for her misconduct, according to FINRA, although it soon “realized its mistake.” Ameriprise was fined $750,000 for these alleged failures to supervise its representative’s scheme.
The firm was fined for failing to supervise its representatives’ conversion of customer funds again in 2016. According to FINRA’s findings, an Ameriprise broker converted more than $370,000 from five customer accounts. Ameriprise failed to look into red flags connected to a number of wire transfer requests, “including that the funds were being transmitted to a business bank account associated with an Ameriprise representative.” The broker in question, who was employed as a sales assistant and office manager during the period in question, took the funds from his own family members, submitting forms to transfer funds from their accounts into his office’s business bank account, then removing the funds “in order to pay himself additional salary, commissions he had not earned and other money to which he was not entitled.”
FINRA found that Ameriprise failed to look into red flags of his conduct, including his transfer of funds to an account that belonged to him. The firm also allegedly failed to properly look into “possible signature irregularities” on request forms, only discovering his scheme when another employee “found evidence in a trash can that the office manager had been practicing signing the signature of a family member from whom he was scheming to convert funds.” Ameriprise was issued a fine of $850,000 for its alleged failures to supervise the conversion of customer funds.
Ameriprise Fined $4.5 Million Over Forgeries, Misappropriation
Those were not the only instances of theft by Ameriprise representatives. In 2018 the Securities and Exchange Commission charged Ameriprise Financial Services with failing to protect its investors’ funds from misappropriation by firm employees. According to the charges, five Ameriprise representatives—including one described above—engaged in various fraudulent acts to steal more than $1 million from retail customers. Two of the representatives allegedly forged customer signatures “on dozens” of forms and changed customer addresses to their own on check disbursement requests. In some cases, forms containing forgeries were flagged as irregular, but Ameriprise nonetheless failed to conduct proper inquiries into the signs of possible fraud.
As the SEC noted in a press release, all five of the representatives had been terminated by Ameriprise. The firm was censured for its supervisory failures and ordered to pay a penalty of $4.5 million. “A critical obligation of an investment adviser is to safeguard investor assets,” said one of its enforcement directors in a statement. “Ameriprise failed to meet that obligation and as a consequence was unable to prevent the theft of its clients’ assets.”