Minnesota-based Ameriprise Financial Services will pay $230,000 to settle charges that it sold mutual fund share classes with unnecessarily high fees costing retirees nearly $1.8 million in excessive charges.
Ameriprise agreed to pay the fine and to reimburse impacted clients on Wednesday in a consent agreement with the Securities and Exchange Commission, which filed administrative charges against the company.
As is usual in such cases, the company neither denied nor admitted to the charges as part of the agreement.
From at least January 2010 to June 2015, Ameriprise failed to evaluate whether certain retirement account customers were eligible for less expensive mutual fund share classes, according to the SEC.
Instead, the firm sold more expensive Class A shares carrying up-front sales charges, or Class B and C shares with back-end contingent deferred sales charges, without disclosing that it would receive higher compensation from the purchases, and that the share classes would negatively impact returns within the retirement accounts, the SEC said.
About 1,800 customer accounts paid a total of $1.8 million in unnecessary up-front sales charges, contingent deferred sales charges and higher ongoing fees because of Ameriprise’s practices, according to the SEC. The firm allegedly violated sections of the Securities Act prohibiting obtaining money from the sale of securities by means of untrue statements or omissions of fact.
In a Wednesday press release, the SEC said that Ameriprise cooperated with its investigation and voluntarily identified the impacted customer accounts.
Ameriprise also issued payments covering the amount of excessive fees, including more than $190,000 in interest, to the affected customers, converting them to the mutual fund share classes with the lowest expenses for which they are eligible at no cost, the SEC said.