Using your selected article about an alleged legal/ethical compliance breach, an

Question

Using your selected article about an alleged legal/ethical compliance breach, answer the following questions (using A,B,C,D,E formatting). If the article does not address the question, state that the article did not address this point.

C.            When did the regulatory agency and/or court take action on this behavior?

D.            What penalties and punishments resulted from this behavior?

E.            What steps will be taken by the company to prevent the behavior from happening in the future?

Article for Compliance Report:

https://www.sec.gov/news/press-release/2018-26

Text from article:

SEC Charges Ameriprise With Overcharging Retirement Account Customers for Mutual Fund Shares

The Securities and Exchange Commission today announced that a Minnesota-based broker-dealer and investment adviser has agreed to settle charges for recommending and selling higher-fee mutual fund shares to retail retirement account customers and for failing to provide sales charge waivers.

According to the SEC’s order, Ameriprise Financial Services Inc. disadvantaged certain retirement account customers by failing to ascertain their eligibility for less expensive mutual fund share classes. Ameriprise recommended and sold these customers more expensive mutual fund share classes when less expensive share classes were available. Ameriprise also failed to disclose that it would receive greater compensation from the purchases and that the purchases would negatively impact the overall return on the customers’ investments.

“Ameriprise generated greater revenue for itself but lower returns for its retirement account customers by recommending higher-fee share classes,” said Anthony S. Kelly, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “As evidenced by our recently announced Share Class Selection Disclosure Initiative, pursuing these types of actions remains a priority for the Division as we seek to get money back in the hands of harmed investors.”

Approximately 1,791 customer accounts paid a total of $1,778,592.31 in unnecessary up-front sales charges, contingent deferred sales charges, and higher ongoing fees and expenses as a result of Ameriprise’s practices. Ameriprise cooperated with the Commission and voluntarily identified the affected accounts, issued payments including interest to the affected customers, and converted eligible customers to the mutual fund share class with the lowest expenses for which they are eligible, at no cost.

The SEC’s order instituting a settled administrative and cease-and-desist proceeding finds that Ameriprise violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. Without admitting or denying the findings, Ameriprise consented to a cease-and-desist order, a censure, and a penalty of $230,000.

The SEC’s investigation was conducted by Salvatore Massa, Steven J. Meiner, and John Farinacci of the Asset Management Unit, and supervised by Jessica M. Weissman.

Explanation / Answer

C. When did the regulatory agency and/or court take action on this behavior?

D. What penalties and punishments resulted from this behavior?

E. What steps will be taken by the company to prevent the behavior from happening in the future?

Ameriprise failed to inform customers that selecting such an option would leave to greater compensation for Ameriprise and these purchases would negatively impact returns for customers. As next step following needs to be done by Ameriprise to prevent the behavior from happening in the future:

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