The Financial Industry Regulatory Authority is ordering Ameriprise Financial Services (AMP) to pay $50K for failing to properly supervise and notice that one of its brokers was bilking his own family members. According to the self-regulatory organization, the registered representative took over $370K from five firm customers, which included his domestic partner, mother, grandparents, and stepfather.
From 10/11 to 9/13, the broker moved the funds to a business account. The transfers went undetected for two years because Ameriprise purportedly neglected to adequately supervise the moving of customer funds to third parties. It wasn’t until 9/13 that evidence was found that the broker had been practicing the signature of a family member.
The Ameriprise broker turned in forms to move the money from the brokerage accounts of customers into a business bank account. The transfer was under the guise of making investments. Instead, said FINRA, the broker allegedly used the money to pay himself commissions and an additional salary.
FINRA said that Ameriprise should have identified and responded to the red flags. The SRO said that the firm should have known if it didn’t already that the funds from the customer account were moved to one belonging to one of its registered representatives. The regulator said that the firm should have adequately investigated the potential signature irregularities that it noticed on a number of wire request forms. Four of the nine wire requests made were flagged for additional review on other grounds but, according to FINRA, Ameriprise did not do an adequate job of following up.
Ameriprise is settling the FINRA securities charges without admitting or denying. It has already paid restitution, interest, and related fees to the customers who were harmed. The broker was barred from the industry in 2014.