- The latest in a string of regulatory cases targeting advisors for putting retirement savers into funds that had higher fees when lower cost products were available.
- The advisors were accused of not waiving fees and benefiting from sales of higher-profit funds at the expense of investor returns.
Ameriprise Financial Services steered retirement savers into higher cost mutual funds than they needed, allowing it to benefit from higher sales fees while dinging investment returns, the Securities and Exchange Commission said Wednesday.
The Minneapolis-based brokerage and investment advisor agreed to settle the agency's charges that it recommended the higher fee products and didn't waive fees, putting its customers at a disadvantage. Ameriprise agreed to pay a $230,000 civil penalty.
It is the SEC's latest case focused on whether advisors are putting clients in suitable products. Earlier this month, the agency announced an initiative where advisors can self-report behavior and return investor money without penalty.
Last October, UBS agreed to pay $3.5 million to settle similar charges that it steered retirement plan savers and charities into higher-fee funds than they were eligible for and didn't waive fees.
Three years ago, the Financial Industry Regulatory Authority levied ordered brokers to pay back tens of millions of dollars for more than 75,000 retirement accounts and charities that overpaid for funds. The firms in the settlements included Wells Fargo, Raymond James, LPL Financial, Edward D. Jones, Stifel Nicolaus, Janney Montgomery Scott, AXA Advisors and Stephens Inc.
The SEC said Ameriprise sold retirement savers certain funds when less expensive options were available and didn't tell the customers that it would get paid more in fees from the funds it was selling. Higher fees cut into investor returns.
The activity involved 1,791 customer accounts from January 2010 through June 2015 and more than $1.78 million in unnecessary fees. Ameriprise cooperated with the SEC and voluntarily identified the accounts. It has repaid the customers with interest and moved them into lower-cost funds, the SEC said.
In a statement, Ameriprise said, "As pointed out in the settlement, Ameriprise voluntarily paid full remediation to clients, with interest. It's important to note that this is a long-standing industry topic and numerous firms have settled with the SEC and FINRA on similar matters."
It is also a twist on a number of private lawsuits over the last decade that have taken large corporate employee retirement plans to task for putting employee savers into higher priced funds where lower-cost options were available. Another dozen or so lawsuits targeting high fees in university employee retirement funds is also winding its way through the system, with one involving New York University being the first of its kind headed to trial.