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Ameriprise Hit with $9 Million Penalty

December 28, 2006

Ameriprise • New Hampshire Charges Ameriprise with Fraud • Ameriprise Hit with $9 Million Penalty • Ameriprise Settles With Regulators Over Laptop Theft • Ameriprise Loses Customer Data --- • Consumer Complaints

Ameriprise Financial Inc. has been ordered to pay $9.3 million after three retired airline pilots charged the company mishandled their savings by putting them in high-fee mutual funds.

An NASD arbitration panel imposed the penalty against Securities America, the brokerage unit of Ameriprise, and broker Robert Gormly. The penalty includes $3.8 million in compensatory damages, $2.5 million in costs and attorneys' fees and $3.8 million in punitive damages.

The three investors alleged negligence, common-law fraud and breach of fiduciary duty, among other acts of wrongdoing.

It is the second penalty in four months against Securities America for allegedly putting clients in unsuitably risky investments.

"Securities America sought in good faith to resolve this matter prior to the arbitration," spokesman Chris Reese said. "We will work with the clients to arrange for prompt payment."

In September, the company agreed to pay $16.3 million to settle a case involving former Exxon Mobil Corp. workers.

Ameriprise, formerly known as American Express Financial Advisors, was spun off by American Express in 2005.

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