Ameriprise Financial, a well-known financial planning and investment firm, has faced a number of lawsuits over the years. These legal challenges often stem from allegations of misconduct and breach of fiduciary duty on the part of the company and its financial advisors. Given the complicated nature of financial planning, it is important for clients to be aware of the potential risks and legal issues associated with working with firms like Ameriprise.
In one notable case, a class-action lawsuit accused Ameriprise and an adviser of multiple instances of fraud, leading to significant financial losses for clients, including one account that lost over $900,000 in value. Additionally, Ameriprise has faced disciplinary disclosures with the SEC, as well as a $5 million penalty to settle SEC charges related to the sales of variable annuities.
These lawsuits, while not indicative of the entirety of Ameriprise’s business, are critical for clients to consider when evaluating the reputation and trustworthiness of a financial planning firm. Being informed about past incidents can help individuals make more informed decisions when choosing the right financial advisor to manage their assets and secure their financial futures.
Overview of Ameriprise Lawsuits
Ameriprise Financial, a prominent financial planning and wealth management company, has faced multiple lawsuits over the years. This section delves into an overview of these legal cases and focuses on the recent lawsuits and claims made against the company.
In a class-action lawsuit, Ameriprise and one of its advisors were accused of fraudulent activities, including churning clients’ accounts, unsuitable investments, and excessive fees. The plaintiff, Donelson, claimed his account lost more than $900,000 in value while with Ameriprise, and he attributed this loss to malfeasance.
Further, the U.S. Supreme Court heard a dispute between Ameriprise and its former advisor. The Securities Industry and Financial Markets Association (SIFMA) supported Ameriprise in this case by signing an amicus brief. The details and consequences of this case are yet to be revealed.
Another case involving Ameriprise Financial and its financial advisor, Robert Kovalchik, took place in 1999, where the plaintiffs, Gary and Mary Gregg, accused that Kovalchik deceived them with material misrepresentations to sell certain insurance policies. The trial court concluded that Kovalchik engaged in deceptive sales practices, subsequently leading to a lawsuit against Ameriprise Financial and its affiliates.
A similar case transpired in 2022, as Ameriprise Financial Services, LLC and another defendant faced accusations related to fraud, forgery, and theft. The claims in this matter arose under several Connecticut state law statutes, as well as the federal Racketeer Influenced and Corrupt Organizations Act (RICO).
Financial Advisor Misconduct
Financial advisors in firms like Ameriprise have a responsibility to provide the best possible service to their clients. However, there have been instances where certain Ameriprise advisors have been subject to misconduct allegations. In this section, we will discuss some of the most common types of financial advisor misconduct, focusing on breach of fiduciary duty, unauthorized transactions, and excessive fees and commissions.
Breach of Fiduciary Duty
Financial advisors have a fiduciary duty to act in the best interests of their clients. Breach of fiduciary duty occurs when an advisor puts their own interests or the interests of their firm above that of the client, which may lead to significant financial loss for the client. In the past, some Ameriprise financial advisors have faced complaints and allegations of breaching their fiduciary duties.
Unauthorized transactions refer to any investment or trading activity carried out by a financial advisor without the prior consent or knowledge of their client. These transactions may be harmful to the client’s portfolio and can lead to financial losses. In some cases, Ameriprise financial advisors have been sanctioned for carrying out unauthorized transactions. Clients may check the BrokerCheck database by FINRA to review the compliance history or any previous misconduct of their financial advisors.
Excessive Fees and Commissions
Excessive fees and commissions are charged when a financial advisor recommends or executes investment strategies that result in higher fees or commissions for themselves or their firm, without consideration of the client’s best interests. In some cases, Ameriprise has faced complaints and regulatory fines for failing to supervise its representatives’ actions, which led to the charging of excessive fees and commissions.
It is crucial for clients to be aware of the potential risks involved with working with a financial advisor and to actively monitor their accounts to ensure that their investments align with their long-term financial goals. If they believe their financial advisor has engaged in misconduct, clients should promptly report their concerns to the firm and, if needed, file an arbitration claim with FINRA.
Securities and Exchange Violations
Ameriprise Financial Services has faced various lawsuits and regulatory actions with regard to securities and exchange violations. Two notable incidents involve municipal bond transactions and offerings and sales to qualified institutional buyers.
Municipal Bond Transactions
In one case, Ameriprise Financial Services settled charges with the Securities and Exchange Commission (SEC) for failing to safeguard retail investor assets from theft by its representatives. The company agreed to pay a penalty of $4.5 million for these violations. This case highlights the importance of ensuring adequate protections for investor assets in the securities industry.
Offerings and Sales to Qualified Institutional Buyers
Another incident involves RiverSource Distributors, Inc., an affiliate of Ameriprise Financial Services. The SEC issued an enforcement order against the company for violating rules related to the exchanging of annuities. This enforcement action demonstrates the consequences of not adhering to the regulations governing the securities industry, including those applicable to offerings and sales to qualified institutional buyers.
These incidents are important to consider in the broader context of Ameriprise Financial Services’ legal history and the consequences faced due to securities and exchange violations. Complying with regulations is essential to maintaining trust and credibility in the financial services industry.
Finra Arbitration and Lawsuit Outcomes
Arbitration Awards and Damages
In some cases, Ameriprise Financial has faced arbitration awards and damages stemming from disputes with former brokers and clients. One such instance involved a former broker who had yet to pay over $747,555 awarded to Ameriprise Financial in a FINRA arbitration case, leading the firm to sue him in federal court.
Another case saw Edward Jones’ attempt to restrain an Ameriprise broker backfire, resulting in a FINRA arbitration panel ordering the firm to pay $562,000, including $447,000 in damages and other related expenses.
Federal Court Decisions
Federal court decisions related to Ameriprise Financial and arbitration outcomes have varied. In one instance, the U.S. Supreme Court sided with a former independent broker for Ameriprise Financial, Denise Badgerow, who challenged the outcome of a FINRA arbitration award. This case had been ongoing since 2016.
In another situation, the First Circuit Court determined that FINRA needn’t explain an arbitration decision involving Ameriprise. The case involved Giovanni and Mariantonia Lanza, who sued FINRA after a dispute with Ameriprise broker Richard Ewing. While their case against Ewing was settled, the claims against Ameriprise were dismissed in FINRA arbitration.
Ameriprise had also filed a motion with FINRA to stay an arbitration case involving the Belands, seeking to enforce a settlement agreement and enjoin them from pursuing arbitration. However, the motion was denied by the arbitration panel and ultimately, the Second Circuit Court decided that the Ameriprise settlement does not cover the Belands’ suitability claims.
Ameriprise Financial Services and Products
Ameriprise offers a wide range of financial services and products designed to meet the needs of individual investors, families, and businesses. These offerings include alternative investments and managed accounts, each with their unique set of features and fees.
Alternative investments at Ameriprise cover a diversified range of sectors and asset classes, such as private equity, hedge funds, real estate, and commodities. These can be a valuable addition to traditional investments and may provide potential benefits to a well-constructed portfolio, such as diversification, risk management, and the potential for higher returns. However, alternative investments are generally considered to be riskier and likely to have higher fees compared to more traditional investment products.
Ameriprise offers managed accounts, which provide personalized investment management and professional advisory services to clients. Depending on the program, investments are managed by Ameriprise financial advisors or by external portfolio managers who follow a disciplined and systematic approach to asset allocation, risk management, and investment selection.
The minimum investment requirements for Ameriprise managed account programs are as follows:
- SPS Advantage and Active Portfolios: $25,000
- SPS Advisor Accounts: $100,000
- Select Separate Accounts: $100,000 to $250,000
Forbes notes that the firm discloses details on fees associated with their accounts on their website. Clients may encounter annual account maintenance and custodial fees between $10 and $100, a $39.95 fee per no-load mutual fund, and legal transfer fees of $30.
For investors considering Ameriprise’s products and services, it is essential to understand the potential risks and rewards, as well as the costs associated with their offerings. This includes being aware of any recent lawsuits or regulatory actions against the company, mentioned in Law Offices of Robert Wayne Pearce and Kansas City Business Journal, which could impact a client’s decision to engage their services or invest in their offerings.
Compliance and Disclosures
Ameriprise Financial, as a financial services company, is expected to adhere to certain rules and regulations to ensure transparency and protect its clients. In this section, we’ll discuss the company’s compliance with industry standards, related disclosures, and some recent lawsuits regarding these matters.
In their role as both a broker-dealer and an investment adviser, Ameriprise must follow the guidelines set by the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). While Ameriprise typically implements proper supervisory and compliance procedures, like any large financial firm, lapses may occur. For instance, the SEC investigation in 2018 highlighted some areas of concerns that Ameriprise needed to address.
Regarding the disclosure of information, Ameriprise’s corporate entities and important disclosures page states that the company and its subsidiaries do not provide legal or tax advice. Clients are encouraged to seek professional advice to evaluate any specific information or opinions they may have.
In terms of compensation, Ameriprise financial advisors may be involved in arbitration claims if clients feel that they’ve experienced investment losses due to the advisor’s misconduct. Clients have the right to sue Ameriprise financial advisors in case they fail to abide by FINRA’s rules and regulations, resulting in financial losses.
As a financial institution, Ameriprise has dealt with occasional lawsuits related to securities fraud, breach of fiduciary duty, and regulatory actions. For example, a class-action lawsuit in 2019 alleged that Ameriprise and one of its advisors failed to meet their obligations. Clients who have suffered losses caused by Ameriprise or its employees’ misconduct, as mentioned before, can pursue compensation or other appropriate actions.
To maintain trust with its clients, Ameriprise Financial must consistently demonstrate its commitment to adhering to industry standards, providing accurate and clear disclosures, and rectifying any lapses in its compliance and compensation policies.
Steps for Investors Affected by Ameriprise Lawsuits
For investors affected by Ameriprise lawsuits, it’s important to take appropriate steps in order to protect your interests and potentially recover losses. This section will outline the key steps for clients, including contacting an investment fraud lawyer and filing a complaint with regulatory authorities.
Contacting an Investment Fraud Lawyer
One of the first steps for affected investors is to consult with an experienced investment fraud lawyer. These specialized attorneys understand the complexities of investment law and can provide invaluable guidance on the best course of action for your specific case.
During an initial consultation, the lawyer will review your situation and determine the likelihood of recovering your losses. They can also explain the types of claims that can be brought forth against Ameriprise and guide you through the process of pursuing litigation, arbitration, or mediation.
Filing a Complaint with Regulatory Authorities
In addition to seeking legal representation, it’s crucial for investors to file complaints with the appropriate regulatory authorities. The Financial Industry Regulatory Authority (FINRA) is a key organization tasked with the oversight of brokerage firms and their representatives, such as Ameriprise Financial Services.
Filing a complaint with FINRA will bring the issue to their attention, prompting an investigation that may lead to disciplinary action against the parties involved. Additionally, it’s important to report any potential misconduct to the Securities and Exchange Commission (SEC) and relevant state regulatory agencies. This will ensure that the appropriate governing bodies are aware of your situation and can take necessary enforcement or corrective measures.
In conclusion, if you find yourself affected by the Ameriprise lawsuits, it’s essential to speak with an investment fraud lawyer and report your concerns to the relevant regulatory bodies. By taking these steps, you can protect your interests and increase the likelihood of recovering any losses occurred due to unethical practices or misconduct.
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