Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, March 24, 2011

Will Ameriprise Bail Out Securities America?

Reuters reported earlier today that Ameriprise Financial doesn't want to bail out Securities America.  If so, its brokerage unit would likely go under because of the huge liability resulting from customers' claims (both in a class action and arbitrations) stemming from SA's sales in private placements of securities in Provident Royalties and Medical Capital Holdings.  Last week a federal district judge rejected a $21 million class action settlement of the class action.

But maybe Ameriprise is just posturing.  After the class action settlement was rejected, lawyers for investors, Ameriprise and SA started mediation.  If Ameriprise is willing to walk away, it certainly impacts the bottom line.  Investment News (which has provided excellent coverage of this drama) quotes an industry source this afternoon that who would be "shocked" if Ameriprise let SA collapse.

Stay tuned!

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