Ameriprise Financial Services has agreed to pay over $17 million to settle Securities and Exchange Commission charges that it sold investments without disclosing that it was being paid by the investment company to sell the investment, according to a July 11 article by the Associated Press published in the New York Times. Between 2000 and 2004, Ameriprise sold millions of dollars of real estate investment trusts (REITs) in exchange for which it received approximately $30.8 million of compensation that it did not disclose to the purchasers of such REITs, according to the SEC. The receipt of undisclosed compensation constituted a clear conflict of interest and violated applicable securities laws.
This case is another in a long line that illustrates that so-called “financial consultants” and “investment advisors” associated with broker dealers may have motivations in recommending and selling investments that are at odds with their clients. Such behavior is inconsistent with the laws and rules governing the brokerage industry.
Sellers of investments are bound by law to disclose, prior to or at the time of sale, all facts about the investment that a reasonable person would deem to be important in making the decision to purchase. Information that a seller’s recommendation may be motivated by a sales commission rather than what is in the purchaser’s best interest, falls into that category of material information that the seller is required to disclose. Investors who have suffered losses in investments purchased on the advice of conflicted advisors have compelling claims to recover their losses.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing institutional and individual investors in securities-related litigation and arbitration. For further information, please contact us.