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Ameriprise Financial Services, LLC has agreed to a $450,000 fine and censure from FINRA over supervisory failures related to certain variable annuity exchanges. The firm was also ordered to pay $993,950.47 in restitution for violations of FINRA supervisory and variable annuity rules.
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Ameriprise Financial Services, LLC has agreed to a settlement with the Financial Industry Regulatory Authority (FINRA) that includes a $450,000 fine and a censure. The action concerns Ameriprise’s supervision of recommendations involving certain variable annuity exchanges with guaranteed lifetime withdrawal benefit (GLWB) riders between January 2015 and December 2018.
According to FINRA, during this period Ameriprise failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to supervise recommendations of specific variable annuity exchanges involving contracts with GLWB riders. The firm did not provide sufficient guidance to its registered principals on how to determine whether certain customers would benefit sufficiently from the GLWB rider’s growth credit feature, prior to commencing withdrawals, to justify the higher fees associated with the rider. These higher fees applied for the duration of the contract.
FINRA found that these supervisory shortcomings resulted in violations of several of its rules. Ameriprise was found to have violated FINRA Rule 3110, which governs supervisory systems, as well as FINRA Rule 2330(c) and (d), which relate to variable annuity transactions and supervision. The firm was also cited for violating FINRA Rule 2010, which requires member firms to observe high standards of commercial honor and just and equitable principles of trade.
As part of the settlement, Ameriprise agreed to pay a fine of $450,000 and accepted a censure. In addition, the firm was ordered to pay restitution totaling $993,950.47. The restitution is intended to address harm related to the identified supervisory failures in connection with the variable annuity exchanges involving GLWB riders.
Ameriprise has been a FINRA member since 1972. The firm is headquartered in Minneapolis, Minnesota, and has almost 15,000 registered representatives. It conducts a general securities business and offers a range of investment products and services, including variable annuities, to retail customers.
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