Ameriprise Pays $17.3M To Settle SEC Charges
July 10 2009 - 5:41PM
Dow Jones News
A unit of Ameriprise Financial Inc. (AMP) agreed to pay $17.3
million to settle charges with the Securities and Exchange
Commission that the company received "approximately $30.8 million
in undisclosed compensation" for selling real estate investment
trusts to brokerage customers.
In the settlement, the SEC alleged that senior management at
Ameriprise instituted or authorized the payments. Ameriprise
neither admitted nor denied the findings.
The charges stem from Ameriprise's sale of REITs between 2000
and May 2004, when the company was a unit of American Express Co.
(AXP).
The SEC alleged that Ameriprise "demanded and received so-called
'revenue sharing' payments related to its sales of REITs and failed
to disclose the payments as required." The SEC also alleged
Ameriprise didn't disclose the conflicts of interest these
additional payments created. In addition, the SEC alleged
Ameriprise "issued a variety of mislabeled invoices to the REITs as
a means of collecting the undisclosed revenue sharing
payments."
Also, the SEC alleged the Minneapolis broker-dealer "sold more
than $100 million of unregistered shares of one particular REIT in
violation of the registration provisions of the federal securities
laws."
An Ameriprise spokesman said, "This is a very old case that
hinged on issues of revenue-sharing disclosure that ended in 2004.
We long ago expanded our disclosures to ensure that our clients
received the information from us directly as well as through the
prospectus of the product issuer."
The REITs listed in the proceeding were created, managed, and
advised by W.P. Carey & Co. LLC and CNL Holdings Group,
Inc.
The SEC alleged Ameriprise's revenue-sharing agreements were
"part of a company-wide practice instituted and/or authorized by
Ameriprise's senior management in which Ameriprise offered and/or
promoted certain non-proprietary investment products."
The SEC said its investigation is continuing.
Shares of Ameriprise closed down 39 cents, or 1.7%, to $22.14
Friday and are unchanged in after-hours trading.
-By Brett Philbin, Dow Jones Newswires; 212-416-2173;
brett.philbin@dowjones.com