Saturday, July 11, 2009
The SEC announced that broker-dealer Ameriprise Financial Services, Inc., settled charges alleging that it received millions of dollars in undisclosed compensation as a condition for offering and selling certain real estate investment trusts (REITs) to its brokerage customers. Ameriprise agreed to pay $17.3 million to settle the SEC's charges.
The SEC's order finds that Ameriprise demanded and received so-called "revenue sharing" payments related to its sales of REITs and failed to disclose the payments as required. Ameriprise also sold more than $100 million of unregistered shares of one particular REIT in violation of the registration provisions of the federal securities laws. The SEC's order finds that neither Ameriprise nor the REITs disclosed to investors that additional payments were being made in connection with the sale of REIT shares, or the conflicts of interest these additional payments created. The SEC's order also finds that Ameriprise issued a variety of mislabeled invoices to the REITs as a means of collecting the undisclosed revenue sharing payments that appeared to be legitimate reimbursements for services provided by Ameriprise.
The SEC censured Ameriprise and ordered it to cease and desist from committing or causing violations of Sections 5(a), 17(a)(2), and 17(a)(3) of the Securities Act of 1933 and Securities Exchange Act of 1934 Rule 10b-10. The SEC also ordered Ameriprise to pay $17.3 million in disgorgement and financial penalties. Ameriprise has consented to the issuance of the SEC's order without admitting or denying the findings.