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September 14, 2016 at 09:24 AM
The Financial Industry Regulatory Authority (FINRA) said Wednesday it fined Ameriprise Financial Services (AMP) $850,000 for failing to detect activities that allowed a registered rep to take $370,000 from accounts that were owned by five of his family members.
“Ameriprise failed to exercise reasonable diligence in supervising the transmittal of customer funds to third-party accounts,” said FINRA Executive Vice President and Chief of Enforcement Brad Bennett in a statement. “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.”
The rep, who served as an office manager and sales assistant, took the funds from family-members’ accounts from October 2011 to September 2013; at the time, the accounts were in the name of his mother, step-father and grandparents as well as his domestic partner.
To obtain the funds, he submitted request forms to transfer the assets from the customers’ Ameriprise brokerage accounts into the business bank account of the office, allegedly to make investments. He then took funds from that account to pay himself additional salaries and commissions, along with other money to which he was not entitled, according to FINRA.
FINRA barred the rep from the business in June 2014.
FINRA said Ameriprise did not “adequately investigate red flags associated with nine third-party wire requests, including that the funds were being transmitted to a business bank account associated with an Ameriprise representative.”
