SEC Charges Ameriprise in Fraudulent Scheme to Obtain Undisclosed Compensation
Ameriprise to Pay $17.3 Million to Settle SEC Charges
FOR IMMEDIATE RELEASE
Washington, D.C., July 10, 2009 - The Securities and Exchange Commission today announced an enforcement action against Minneapolis-based broker-dealer Ameriprise Financial Services, Inc., for receiving millions of dollars in undisclosed compensation as a condition for offering and selling certain real estate investment trusts (REITs) to its brokerage customers. Ameriprise agreed to pay $17.3 million to settle the SEC's charges.
REITs are entities that invest in different kinds of real estate or real estate-related assets such as office buildings, retail stores, and hotels. The SEC's order finds that Ameriprise demanded and received so-called "revenue sharing" payments related to its sales of REITs and failed to disclose the payments as required. Ameriprise also sold more than $100 million of unregistered shares of one particular REIT in violation of the registration provisions of the federal securities laws.
"Few things are more important to investors than getting unbiased advice from their financial advisers," said Robert Khuzami, Director of the SEC's Division of Enforcement. "Ameriprise customers were not informed about the incentives its brokers had to sell these investments."
The SEC's order finds that neither Ameriprise nor the REITs disclosed to investors that additional payments were being made in connection with the sale of REIT shares, or the conflicts of interest these additional payments created. The SEC's order also finds that Ameriprise issued a variety of mislabeled invoices to the REITs as a means of collecting the undisclosed revenue sharing payments that appeared to be legitimate reimbursements for services provided by Ameriprise.
The SEC censured Ameriprise and ordered it to cease and desist from committing or causing violations of Sections 5(a), 17(a)(2), and 17(a)(3) of the Securities Act of 1933 and Securities Exchange Act of 1934 Rule 10b-10. The SEC also ordered Ameriprise to pay $17.3 million in disgorgement and financial penalties. Ameriprise has consented to the issuance of the SEC's order without admitting or denying the findings.
The SEC's investigation is continuing.
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For more information, contact:
Associate Director, SEC's New York Regional Office
Branch Chief, SEC's New York Regional Office