The Financial Industry Regulatory Authority (FINRA) has
Ameriprise Financial Inc.
) and it's clearing firm, American Enterprise Investment Services
Inc., (AEIS) for $750,000. The company and its affiliate were
penalized on the grounds of failure to properly oversee
wire-transfer requests and the transfer of customer funds to
The fine is a consequence of a previous enforcement action taken
by FINRA against a former Ameriprise-registered representative.
This representative was accused of swindling $790,000 from two
senior citizen clients over a four-year span through fake
signatures on wire-transfer requests and transferring funds to
her own bank accounts.
Upon inquiry, the fraud was uncovered and Ameriprise compensated
in full to the victims. The accused representative dismissed from
Ameriprise in 2010 and was banned from the securities industry in
2011 by FINRA. The regulatory body also noted that such
fraudulent behavior was not possible if the company had
maintained strict supervisory system.
FINRA accused Ameriprise and AEIS of having lax managerial system
to overview fund transfers. Further, absence of strict policies
for detection and prevention of multiple fund transfers to
third-party accounts gave a wide berth to fraudulent activities.
Lastly, the company did not bother to properly investigate the
rejected wire-transfer requests.
The lack of security measures led the single representative to
transfer funds several times to her bank accounts. Even after the
representative was terminated from job, she managed to dupe the
company by another forged wire-transfer request. Though initially
Ameriprise remitted the funds, it soon realized its folly and
prevented the representative from accessing the funds.
FINRA's Department of Enforcement and Member Regulation carried
out the inquiry. Ameriprise and AEIS neither admitted nor denied
the allegations. Ameriprise, in its defense, said that it was
pleased to settle the matter and has deployed efficient
administrative systems to ensure prevention of such fraudulent
activities in the future.
Ameriprise currently carries Zacks Rank #3 (Hold). Other asset
managers that are performing better than Ameriprise include
AllianceBernstein Holding L.P
Cohen & Steers Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy)
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