More On Legal & Compliancefrom The Advisor's Professional Library
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
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.