Ameriprise Financial Services has agreed to pay $4.5 million to settle charges by the SEC that the firm failed to protect client assets against fraud and theft by company representatives.
The SEC Slams Ameriprise Financial
In August 2018, the Securities and Exchange Commission charged Ameriprise Financial Services, Inc. with failing to protect client assets from numerous fraudulent acts by the firm's representatives. According to the SEC, five Ameriprise representatives allegedly committed numerous acts of investment fraud and stole over $1 million in client funds over a four-year period. The representatives forged client documents, made unauthorized address changes, and disbursed client funds without client knowledge or approval. The five company representatives, based in Ohio, Minnesota, and Virginia, were terminated for misappropriating client funds.
Ameriprise Financial Services provides investment advice and brokerage services to clients through a national network of about 9,700 representatives. As a registered adviser and broker-dealer, they have an obligation to safeguard investor assets. According to the SEC's Enforcement Division, Ameriprise failed to perform that obligation. They failed to supervise the actions of the five charged representatives or implement policies and procedures that protected client assets. As a result, clients' lost millions of dollars from their accounts.
The Fraud Early Detection System
The Fraud Early Detection System was supposed to identify situations where a representative attempted to change a client's address to an address controlled by a company representative. However, a technical error prevented the system from functioning properly. One representative was able to change a client's address to her own personal address without any detection of fraud.
The Analysis Tool
The Analysis Tool, an automated transaction system, was designed to identify situations where a representative attempted to direct cash disbursements from a client's account to an account controlled by a company representative. On multiple occasions, Ameriprise did not detect fraudulent transfers of funds from clients' accounts to representatives' accounts.
Without admitting or denying guilt, Ameriprise agreed to a payment of $4.5 million in penalties and more than $2 million to settle SEC charges for overcharging retirement clients on mutual fund shares. Regulators say that $1.8 million was paid by 1,800 customer accounts for upfront sales charges that should have been avoided.
Victims of investment fraud can often recover damages, including investment principal, expected gains if money had been properly invested, arbitration costs, attorney's fees, and punitive damages for egregious broker misconduct. Call Meyer Wilson at (800) 738-1960 today to discuss your legal options with an experienced investment fraud lawyer.