Ameriprise Negotiates Deals With Securites Regulators

A major financial services company says it will be spending about $59 million on settlements to resolve concerns of state and national agencies about its mutual fund sales and management practices.[@@]

The company, Ameriprise Financial Inc., has negotiated settlements with the Minnesota Department of Commerce, the U.S. Securities and Exchange Commission and the National Association of Securities Dealers, Washington.

“It should be noted that the costs of these settlements were reserved for in prior quarters and will have no effect on the company’s fourth quarter 2005 earnings,” the company says.

Standard & Poor’s, New York, says the settlement announcements will have no effect on its Ameriprise ratings because the potential existence of the fines and other penalties already are factored into the company’s ratings.

Until recently, Ameriprise operated as American Express Financial Advisors, a unit of American Express Company, New York. American Express turned Ameriprise into a separate company in September by giving shares of Ameriprise stock to American Express shareholders.

Ameriprise has reached 2 separate settlements with the SEC.

- Ameriprise will pay $15 million in disgorgement and civil penalties to the SEC to settle charges that AEFA had inadequate procedures in place for enforcing rules against market timing between early 2002 and October 2003, and that AEFA let some mutual fund and variable annuity holders time the market after forbidding customers to do so.

- Ameriprise Financial Services Inc., an Ameriprise broker-dealer unit, will pay $30 million in disgorgement and civil penalties in connection with SEC concerns about revenue-sharing programs.

The SEC says the company now known as Ameriprise Financial Services gave preferential treatment to mutual funds with revenue-sharing agreements without adequately disclosing the agreements to customers.