Ameriprise Financial will pay $3.8 million to settle allegations that New Hampshire-based financial advisers forged client signatures and failed to deliver financial plans.
To artificially boost sales volume, six advisers at the Portsmouth office forged at least 96 client signatures. Two of the advisers were fired, three were disciplined, and a sixth resigned during the investigation.
Whether these were the only instances at that office "cannot be fully ascertained," said Jeffrey Spill, deputy director of the New Hampshire Bureau of Securities Regulation. "In many instances client documents were missing."
Advisers had a catchy name for the wrongdoing: "Taking a 10-minute trip to Kennebunkport" was code for forging documents, according to the settlement. The incomplete financial plans were often sold to other advisers or to family members who wouldn't complain.
Larry Post, the company's vice president for New Hampshire, is banned from securities activity in the state for five years. He is still employed with Ameriprise, but is no longer supervising employees.
The settlement includes a $3.25 million fine, $250,000 in legal costs and $334,000 paid to individuals for incomplete financial plans.
"It's our policy that we require original client signatures," said Ameriprise spokesman Ben Pratt.
He said this is Ameriprise's first settlement on forgery-related matters. "We do not regard this as a widespread problem," he added.
Minnesota Department of Commerce spokesman Bill Walsh said no complaints about these issues have been received by the department.
The settlement comes on the heels of a 2005 $7 million fine paid to New Hampshire for failing to disclose conflicts of interest. Securities regulators said that by not reporting the forgeries, which Ameriprise discovered in 2006, in a timely manner, the company violated an agreement that accompanied the 2005 fine.
The New Hampshire office isn't the only unit where Ameriprise has confronted regulatory issues. An investigation by the Alabama Securities Commission about undelivered Ameriprise financial plans to that state's residents is ongoing.
Securities America, an Ameriprise subsidiary, was fined twice in two years by the National Association of Securities Dealers -- for $375,000 last year because a representative received improper brokerage commissions, and for $2.5 million in 2006 for failing to supervise a broker who allegedly persuaded long-term Exxon Mobil employees to retire early when they couldn't afford to.
Regulator praises Ameriprise
Although it has paid fines since its 2005 spinoff from American Express, none of the alleged improper actions took place after the separation, said Pratt.
"Ameriprise appears to be taking positive steps at this time in New Hampshire, such as correcting its forgery problems and making management changes," said Mark Connolly, director of the New Hampshire Bureau of Securities Regulation, in a statement announcing the settlement.
Ameriprise, which has about 12,000 advisers nationwide and is best known for providing financial planning services to the middle class, would agree. "Compliance is not just a department. It's something that's ingrained in every business unit and in every adviser out there," said Kurt Lofgren, the company's chief compliance officer in a recent interview. The company is spending "tens of millions of dollars per year" on compliance issues, Ameriprise General Counsel John Junek said on the same occasion.
Since the spinoff, the company has introduced training modules for supervisors and invested in technology "to make it easier for supervisors to identify those red flags before those red flags become problems," said Lofgren. Today, field supervisor compensation can be affected by compliance issues in the supervisor's group, creating a financial incentive to sniff out wrongdoing.
"We have implemented what we need to do to ensure a good client experience," said Lofgren.
Ameriprise's shares fell 74 cents, or 1.4 percent, to close at $52.85 Wednesday.
Kara McGuire • 612-673-7293