Ameriprise Financial Services has become the latest financial services firm to get ensnared in the Securities and Exchange Commission’s crackdown on share class infractions.
The Minnesota-based broker-dealer and investment advisor agreed Wednesday to settle charges that it recommended and sold higher-fee mutual fund shares to retail retirement account customers and failed to provide sales charge waivers.
According to the SEC’s order, Ameriprise disadvantaged certain retirement account customers by failing to ascertain their eligibility for less expensive mutual fund share classes.
Approximately 1,791 customer accounts paid more than $1.7 million in unnecessary up-front sales charges, contingent deferred sales charges, and higher ongoing fees and expenses as a result of Ameriprise’s practices.
According to the SEC order, Ameriprise recommended and sold these eligible customers Class A shares with an up-front sales charge or Class B or Class C shares with a back-end contingent deferred sales charge (a deferred sales charge the purchaser pays if the purchaser sells the shares during a specified time period following the purchase) and higher ongoing fees and expenses, when they were eligible to purchase load-waived Class A shares.
Without admitting or denying the findings, Ameriprise consented to a cease-and-desist order, a censure and a penalty of $230,000.
Ameriprise failed to disclose that it would receive greater compensation from the purchases and that the purchases would negatively impact the overall return on the customers’ investments, the SEC said.