Summary
Ameriprise Financial, Inc. (AMP) filed an 8-K on December 1, 2005, detailing the settlement of multiple enforcement actions with the SEC, NASD, and the Minnesota Department of Commerce. These actions stemmed from allegations of inadequate disclosure of revenue-sharing programs, improper market timing in the company's own mutual funds and annuity products, and directed brokerage practices related to preferred mutual funds. The company has agreed to pay a total of $45 million in civil penalties and disgorgement to the SEC, $12.3 million to the NASD, and $2 million to the State of Minnesota. Crucially for investors, Ameriprise has stated that the costs associated with these settlements have already been reserved for in prior quarters and will therefore have no impact on its fourth-quarter 2005 earnings. The settlements require the development of distribution plans, subject to SEC approval, to compensate customers affected by the revenue-sharing and market-timing activities. Additionally, Ameriprise has committed to enhanced disclosure, compliance, and training practices.
Key Highlights
- 1Settlement of SEC enforcement actions for $45 million, covering inadequate revenue sharing disclosures and improper market timing.
- 2Settlement with NASD for $12.3 million related to directed brokerage in connection with revenue sharing programs.
- 3Settlement with Minnesota Department of Commerce for $2 million, addressing similar allegations and sales practices.
- 4The company confirmed that all settlement costs have been previously reserved and will not impact Q4 2005 earnings.
- 5Distribution plans will be developed with SEC approval to compensate affected customers for revenue sharing and market timing.
- 6Ameriprise has agreed to undertakings regarding improved disclosure, compliance, and training procedures.