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Ameriprise Fined $750,000 for Failing to Catch Fraud

The Financial Industry Regulatory Authority (FINRA) has fined Ameriprise Financial (NYSE: AMP  ) $750,000 for not having adequate oversight of customer requests for wire transfers and transmission of customer funds to third-party accounts.

According to FINRA, former Ameriprise registered representative Jennifer Guelinas illegally transferred approximately $790,000 from two customer accounts to her own outside accounts from 2006 to 2010. Ameriprise paid full restitution to the customers and FINRA barred Guelinas from the finance world in 2011. She pleaded guilty to wire fraud last May, according to a Reuters report.

Among FINRA's findings, the authority said that Ameriprise "failed to establish, maintain and enforce supervisory systems designed to review and monitor the transmittal of funds from customer accounts to third-party accounts." Ameriprise and its affiliated clearing arm American Enterprise Investment Services Inc. lacked policies or procedures and failed to detect the fraud despite multiple "red flags," according to FINRA.

FINRA Executive VP and Chief of Enforcement Brad Bennet noted in a statement today that "Firms must have robust supervisory systems to monitor and protect the movement of customer funds." FINRA said Ameriprise and AEIS have neither admitted nor denied the charges, but consented to the entry of FINRA's findings. 

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  • Report this Comment On December 30, 2014, at 2:59 AM, TonyT0315 wrote:

    My Ameriprise experience is most likely related to fraud via bad management of my funds. Ameriprise Financial was recommended to me by my colleague at work. The financial advisor seemed honest and trustworthy and that convinced me to open an account at Ameriprise and transferred my 401K and pension funds which were at that time earning about 30% and 5% respectively at GSK. I opened the Ameriprise account in December 2013 (believing that he can do better) and entrusted him the management of the account indicating to him that my goal was to grow the 401K for my kids. He created 3 subaccounts, annuity/insurance (funded by the pension fund plus about 1/3 of the 401K [why?], with pension deferred for 2 years [why?]) and 2 separate stock portfolios (funded by the balance of the 401K). Then my nightmares started. He was investing in mutual funds with the highest front loads and highest expense ratio; he was buying and selling mutual funds which are intended for long term investment; only 6 out of twelve mutual funds were hardly earning; he invested in depressed Europe stocks all of which were consistently giving negative results. By October 2014, after 10 months with Ameriprise, my account was diving downward loosing significantly in a bullish market that is over 10% high. I did not feel or see that my funds were being managed with my interest in his mind. By November 2014, I decided to close all accounts before the damage become unmanageable. It was a costly account closure with over $30,000 penalty in one sub account alone plus fees and other charges. One more thing, he never highlighted to me the fees being charged on the account, over $500 each month plus the annual fee of $750. It was a very costly experience for me. The lesson here is to avoid Ameriprise financial advisor/broker and perhaps other brokers too as they work for fees and commissions in buying and selling stocks!! Personally manage your portfolio so you can sleep at night!!

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