FINRA fines Ameriprise $850K for supervisory failures
FINRA fined Ameriprise $850,000 for failing to properly supervise one of its registered representatives who converted $370,000 in client funds for personal use, according to the regulator.
The registered rep served as a sales assistant and office manager at Ameriprise, and converted the funds from accounts belonging to five Ameriprise clients – who were also the office manager’s family members, according to FINRA.
The office manager’s actions went undetected from October 2011 to September 2013, FINRA charges. FINRA did not name the office manager, who was barred from the industry in 2014, according to the regulator.
FINRA says that he submitted request forms to transfer funds from the clients’ Ameriprise brokerage accounts into the bank account of the office in which he worked. Next, he transferred funds from that bank account to pay himself commissions he had not earned, FINRA says.
In 2013, another Ameriprise employee discovered evidence in a trash can that the office manager had been practicing forging the signature of a family member, leading to the discovery of his alleged scheme, according to FINRA.
The Wall Street regulator charges that Ameriprise failed to adequately follow-up on red flags as well as investigate possible signature irregularities. For example, four wire requests were flagged for further review, but the firm failed to follow through with those reviews, according to FINRA.
“Ameriprise failed to exercise reasonable diligence in supervising the transmittal of customer funds to third- party accounts. Firms need to pay special attention when funds are wired from customer brokerage accounts to accounts controlled by registered representatives, and will be held responsible when their representatives use their insider status to prey upon customers,” Brad Bennett, FINRA’s chief of enforcement, said in a statement.
An Ameriprise spokeswoman declined to comment. Ameriprise neither admitted nor denied FINRA’s charges, but consented to the regulator’s findings, according to FINRA.
The firm paid restitution, plus interest and related fees to the wronged clients in 2014, FINRA says.
Ameriprise has more than 14,000 individuals registered with FINRA, according to the regulator.