More On Legal & Compliancefrom The Advisor's Professional Library
- Disaster Recovery Plans and Succession Planning RIAs owe a fiduciary duty to clients to prepare for disasters and other contingencies. If an RIA does not have a disaster recovery plan, clients financial well-being may be jeopardized. RIAs should also engage in succession planning, ensuring a smooth transaction if an owner or principal leaves.
- Pay-to-Play Rule Violating the pay-to-play rule can result in serious consequences, and RIAs should adopt robust policies and procedures to prevent and detect contributions made to influence the selection of the firm by a government entity.
Ameriprise Financial Services, Inc., has agreed to pay the Securities and Exchange Commission $17.3 million to settle an enforcement action the SEC levied against the Minneapolis-based broker/dealer. The SEC alleges that Ameriprise received millions of dollars in undisclosed compensation as a condition of offering and selling certain real estate investment trusts (REITs) to its brokerage customers.
The SEC's order says 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."
Robert Khuzami, Director of the SEC's Division of Enforcement, said in a prepared statement announcing the enforcement action that "Few things are more important to investors than getting unbiased advice from their financial advisers. Ameriprise customers were not informed about the incentives its brokers had to sell these investments."
According to the SEC, the Commission'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."
Ameriprise has consented to the issuance of the SEC's order without admitting or denying the findings.