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Written by 7:51 pm FINRA SEC Sanctions, Securities Fraud Articles

Ameriprise Financial Regulatory History Overview 

Ameriprise Financial Services Overview, featured by top securities fraud attorneys, The White Law Group

The White Law Group reviews the regulatory history of Ameriprise Financial Services. 

Ameriprise Financial Services (CRD # 6363/SEC#: 801-28543,8-16791) headquartered in Minneapolis, Minnesota, is dually registered as an investment adviser and broker-dealer. Ameriprise Financial Services is the second-largest independent broker-dealer and one of the largest registered investment advisors (RIAs) in the U.S. The firm reportedly manages $458 billion in assets. According to its CRD/FINRA BrokerCheck report, the firm has 180 disclosures on its record, including 78 regulatory events and 101 arbitrations, among others. 

FINRA, the regulator that oversees brokers and brokerage firms, and the Securities and Exchange Commission may impose regulatory actions against a broker-dealer such as censures, fines, suspensions and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation. The following is a review of the regulatory history of Ameriprise Financial Services. 

Ameriprise Subsidiary Sanctioned for VA Switching 

May 2022 – The Securities and Exchange Commission (SEC) imposed a $5 million fine on RiverSource Distributors Inc., a subsidiary of Ameriprise Financial Services LLC, for allegedly engaging in improper practices involving Ameriprise customers’ variable annuities to generate commissions. According to the SEC, RiverSource employees orchestrated targeted sales strategies from 2016 to 2018 to incentivize Ameriprise Financial Services (AFS) representatives to focus on switching customers’ variable annuity contracts. These efforts reportedly included in-person and virtual meetings with AFS registered representatives to persuade Ameriprise customers to switch their variable annuities. Some RiverSource employees are said to have color-coded customer lists to highlight exchange opportunities and emphasized the commissions that Ameriprise reps could earn. Consequently, variable annuity exchanges increased from $671 million in 2015 to $1,049,000 in 2018. 

In response to the SEC’s investigation, RiverSource’s compliance department took action in March 2018 by sending letters of reprimand and warnings to its supervised individuals and implementing a new training program. These measures led to a decrease in variable annuity exchanges to $838 million in 2019. As part of the settlement, the firm agreed to a cease-and-desist order, a censure, and a $5 million civil money penalty to resolve the SEC’s charges. Ameriprise Subsidiary Reportedly Fined for VA Switching    

Ameriprise Reps Allegedly Misappropriate $1 Million in Client Funds 

August 2018 Ameriprise Financial Services Inc. has agreed to a $4.5 million settlement with the SEC to resolve charges related to its failure to protect retail investor assets from theft by its representatives. The SEC’s investigation revealed that five Ameriprise representatives engaged in multiple fraudulent activities, including forging client documents, resulting in the misappropriation of over $1 million in retail client funds between 2011 and 2014. 

The SEC found that Ameriprise did not establish and enforce adequate policies and procedures to safeguard investor assets from being misused by its representatives. These representatives were located in Minnesota, Ohio, and Virginia, and three of them had previously pleaded guilty to criminal charges. 

Ameriprise terminated the employment of each of these advisors for their misconduct and has since implemented a new system aimed at protecting client funds. Furthermore, the firm has reimbursed all affected clients for the losses they suffered due to the actions of these five representatives. Ameriprise Financial Censured & Fined $4.5 Million 

Ameriprise Financial Sanctioned for Overcharging Retirement Customers 

 March 2018 – Ameriprise Financial Services Inc. has agreed to settle charges with the SEC for recommending and selling higher-fee mutual fund shares to retail retirement account customers while failing to provide appropriate sales charge waivers. The SEC’s investigation found that Ameriprise disadvantaged certain retirement account customers by not verifying their eligibility for more cost-effective mutual fund share classes. 

Ameriprise is accused of recommending and selling these customers more expensive mutual fund share classes when less expensive options were available. Moreover, the firm allegedly did not disclose that it would receive higher compensation from these purchases and that they would negatively impact the overall returns on the customers’ investments. 

As a result of these alleged practices, approximately 1,791 customer accounts ended up paying a total of $1,778,592.31 in unnecessary up-front sales charges, contingent deferred sales charges, and higher ongoing fees and expenses. Ameriprise Financial Services Allegedly Overcharges Retirement Customers 

Failure to Supervise Rep’s Conversion of Funds 

September 2016 – FINRA fined Ameriprise Financial Services, Inc. $850,000 for its failure to detect and prevent the conversion of over $370,000 from five customer brokerage accounts by one of its registered representatives. This occurred between October 2011 and September 2013. The representative, who also worked as a sales assistant and office manager, diverted the funds from accounts belonging to family members and a domestic partner. The conversion took place in two steps: first, he transferred the funds to the office’s business bank account under the guise of making investments, and then he used that account to pay himself an additional salary and unearned commissions. 

FINRA’s investigation found that Ameriprise did not adequately respond to warning signs, including transfers to an account associated with one of its own representatives. The firm also neglected to thoroughly investigate potential signature irregularities on certain wire request forms. Despite some wire requests being flagged for further review for various reasons, Ameriprise failed to take appropriate follow-up actions in four out of nine cases. FINRA Fines Ameriprise $850,000 for Failure to Supervise 

Ameriprise Financial: Broker Misconduct and Customer Complaints

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees. 

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.  

There have been several cases of registered representatives employed by Ameriprise Financial Services who were allegedly involved in broker misconduct and fraudulent activities. 

Advisor Dusty Sternadel Allegedly Stole Client Funds 

September 2022 Dusty Lynn Sternadel, a financial advisor based in Wichita Falls, Texas, was reportedly terminated by Ameriprise Financial Services due to allegations of “illegal activity.” This decision came after former clients of Sternadel made claims on social media about fraud and unlawful conduct. 

Ameriprise Financial Services reportedly terminated Sternadel in July 2022, citing a “violation of company policies related to misappropriation of client funds,” according to her FINRA BrokerCheck report. Ameriprise Advisor Dusty Sternadel Allegedly Misappropriated Client Funds   

Rep Arthur Hoffman Charged with Fraud 

February 2022 – The Securities and Exchange Commission (SEC) charged Arthur S. Hoffman, a former investment advisor at Ameriprise Financial Services, with fraud related to investment recommendations he made to clients. Between May 2019 and December 2019, Hoffman allegedly advised clients to invest in Zima Global Ventures, LLC, a company claiming to trade cryptocurrencies and digital assets for profit. The SEC complaint contends that Hoffman failed to disclose conflicts of interest, including Zima’s agreement to lend him up to $1.5 million at a two-percent annual interest rate for soliciting investors. Additionally, Hoffman was purportedly already indebted to Zima for nearly $170,000. Zima eventually collapsed in January 2020 when its principals were arrested and charged with federal crimes, resulting in losses exceeding $610,000 for six of Hoffman’s clients. Arthur Hoffman, Ameriprise Broker, Fraud Allegations 

FINRA’s Supervision Rules 

All broker-dealers have a responsibility to adequately supervise their advisors. They must ensure they have procedures and systems in place to detect broker misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.   

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.   

The Financial Industry Regulatory Authority (FINRA) operates the largest dispute resolution forum in the securities industry.  In fact, FINRA Dispute Resolution is the forum for almost all disputes between investors, brokerage firms and individual brokers.  This is mainly because the vast majority of brokerage firms have mandatory arbitration clauses in their account agreements that require investors to file their disputes through FINRA.    

National Securities Attorneys  

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.     

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.      

With over 30 years of securities law experience, The White Law Group has the expertise to help investors who were defrauded by their financial advisors. For more information, please visit our website, www.whitesecuritieslaw.com.      

Free Consultation

If you have suffered losses investing with Ameriprise Financial Services and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.  


Tags: , , Last modified: April 2, 2024