The Securities and Exchange Commission announced that Ameriprise Financial Services has agreed to settle charges for recommending and selling higher-fee mutual fund shares to retail retirement account customers and for failing to provide sales charge waivers.
The SEC claims that Ameriprise disadvantaged certain retirement account customers by failing to determine their eligibility for less expensive mutual fund share classes. The broker-dealer allegedly recommended and sold more expensive mutual fund share classes when less expensive share classes were available.
“Ameriprise generated greater revenue for itself but lower returns for its retirement account customers by recommending higher-fee share classes,” said Anthony Kelly, co-chief of the SEC enforcement division’s asset management unit. “Pursuing these types of actions remains a priority…as we seek to get money back in the hands of harmed investors.”
Approximately 1,800 customer accounts paid nearly $1.8 million in unnecessary up-front sales charges, contingent deferred sales charges, and higher ongoing fees and expenses as a result of Ameriprise’s practices.
Ameriprise cooperated with the SEC and voluntarily identified the affected accounts, issued payments including interest to the affected customers, and converted eligible customers to the mutual fund share class with the lowest expenses for which they are eligible, at no cost.
Without admitting or denying the findings, Ameriprise consented to a cease-and-desist order, a censure, and a penalty of $230,000.