Firm fined for ignoring crime

A major regulator has fined the firm for ignoring ‘red flags’ from a former representative

Finra has meted a fine of US$850,000 against Ameriprise Financial for neglecting to supervise a former registered representative who took more than US$370,000 from accounts owned by members of his family over a two-year period.

In a press release, the regulator accuses Ameriprise of failing to act on various red flags during that time, such as nine requests to wire funds from client accounts to a bank account associated with one of the firm’s reps, who was not named in the statement.

At the time, the rep was working as a sales assistant and office manager. From October 2011 to September 2013, he fleeced his mother, stepfather, grandparents, and domestic partner by requesting wires from the Ameriprise brokerage accounts to a business bank account associated with his office. He made the requests under the pretext of using the funds for investments, Finra charged.

The rep instead used the funds to obtain additional salary, commissions, and other money for himself. The scheme was exposed when a colleague found evidence in the office trash that the rep was practicing the signature of one of his family members.

Finra banned the rep from the industry in 2014. Once the fraud was exposed, Ameriprise compensated the affected customers by paying restitution, interest, and other related fees.

The recent ruling from Finra alleges that in addition to its failure to take action on the suspicious wire requests, Ameriprise is also guilty of failing to follow up on the irregularities it found and flagged in signatures on several wire requests.

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