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FINRA Fines Ameriprise $850,000 for Failure to Supervise


The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Ameriprise Financial Services, Inc. $850,000 for failing to detect the conversion of more than $370,000 from five customer brokerage accounts by one of its registered representatives.

FINRA found that from October 2011 to September 2013, a registered representative of the firm who worked as a sales assistant and office manager took more than $370,000 from five Ameriprise customers. The customers were the office manager’s family members, including his mother, step-father and grandparents as well as his domestic partner. The office manager converted the funds through a two-step process. First, he submitted request forms to transfer funds from the customers’ Ameriprise brokerage accounts into the business bank account of the office in which he worked, allegedly for the intended purpose of making investments. He then took funds from that account 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 adequately follow up on red flags, including that the funds were being transferred to an account that the firm knew or should have known belonged to one of its registered representatives. The firm also failed to adequately investigate possible signature irregularities that it flagged on certain wire request forms. In addition, even though four of the nine wire requests were also flagged for further review for other reasons, Ameriprise failed to adequately follow up.

The conduct was discovered in September 2013 when another office 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.

In settling this matter, Ameriprise neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

After Ameriprise discovered the misconduct, it paid restitution, plus interest and related fees, to the customers. FINRA barred the representative in June 2014.

The foregoing information is being provided by The White Law Group. The White Law Group is a national securities fraud, securities arbitration and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.  For more information on The White Law Group, visit https://whitesecuritieslaw.com.

Tags: , , , Last modified: June 27, 2017