Ameriprise Financial sign outside of Minneapolis headquarters.

Ameriprise Fined by FINRA Over Missing Fraudulent Transfers

Ameriprise has been fined, resulting in an agreement to pay an $850,000 fine to settle allegations from FINRA that it failed to catch and stop a sales assistant who was siphoning cash from his relatives’ accounts, even though the company had just improved its systems after a similar failure. The funds came from five different accounts.

According to FINRA’s chief of enforcement Brad Bennett, “firms need to pay special attention when funds are wired from customer brokerage accounts to accounts controlled by registered representatives, and will be held responsible when their representatives use their insider status to prey upon customers.”

The sales assistant and office manager converted more than $370,000 between October 2011 and September 2013 from relatives by submitting wire requests to transfer funds from Ameriprise brokerage accounts into PFG accounts, claiming they were for investments. The funds were then converted to pay himself commissions and additional salary, and to take cash.

Despite updating their supervisory systems in 2012 to prevent this type of fraud, Ameriprise failed to detect the office manager’s transfers even though their anti-fraud system flagged some of the suspected transactions. As a result, Ameriprise agreed to the $850,000 fine and to certify that it had adopted and implemented written supervisory policies designed to oversee third-party wire transfers from its customers’ accounts.

Call a Los Angeles Stockbroker Investment Fraud Attorney Today

If your broker or someone in a position of trust made trades, took money from your account or otherwise acted without your authorization and you suffered a loss, you may have certain legal rights which require your immediate attention.

Contact an experienced Los Angeles stockbroker fraud attorney today for a consultation to discuss your rights and options.

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Photo of buildings in a financial district.

Ameriprise Fined Over Short-Term Trades of Closed-End Funds

Ameriprise Financial Services Inc. has agreed to pay a $100,000 fine to the Financial Industry Regulatory Authority (FINRA) after allegations that the company failed to supervise closed-end fund sales resulting in unsuitable short-term trading, according to the settlement agreement.

The fine stemmed from an employee who wrongfully recommended short-term trading of closed-end funds (CEFs) after they were bought at the IPO. According to FINRA, Ameriprise did not have a system in place to prevent the employee’s actions from taking place. The employee has been fired.

FINRA claimed that Ameriprise knew that CEFs purchased at an IPO were more suitable for long-term investment and that the sales charges applied to the short-term trading were unsuitable. Despite that, Ameriprise did not have a procedure in place to prevent the trades from going through. Ameriprise’s lack of oversight violated NASD Rule 3010.

CEFs are a type of pooled investment that offer a fixed number of shares in an IPO and then are traded on an exchange. Ameriprise began selling CEFs in 2010. The firm had guidelines in place regarding short-term trading, but it failed to have a system to prevent these types of transactions. In fact, on at least two occasions supervisors flagged customer accounts with short-term CEF trading but no action ever was taken.

The $100,000 fine came after FINRA determined that Ameriprise identified the short-term trading, investigated the trades, and then fired the individual who was recommending the short-term CEF trades.

Call a Los Angeles Securities Fraud Attorney Today

If your Ameriprise broker made short-term trades with your closed-end funds, you may have certain legal rights that require your immediate attention.

Contact an experienced Los Angeles securities fraud lawyer today for a consultation to discuss your rights and options.

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FINRA Staff Continues Focus on Manipulative Trading Activity

At its 2016 Annual Conference, the Financial Industry Regulatory Authority (FINRA) is urging its brokerage firm members to continue to look for manipulative trading activity, stating that new technology makes it easier to find patterns of violations.

FINRA told conference attendees to keep an eye toward manipulative trading activity such as layering and spoofing, asking firms to detect and root out violations. According to FINRA’s market regulation department, one of its priorities for 2016 is enforcing Rule 15c3-5 of the Securities Exchange Act, which requires firms to restrict market access only to authorized traders. Further, firms are required to monitor for manipulative conduct.

FINRA’s words are more than just talk: in recent months, the regulatory agency has levied fines in excess of $1 million on several member firms for failing to have appropriate controls in place or for failing to stop market manipulation. FINRA fined Wedbush Securities $1.8 million a few months ago, which we blogged about here.

New technology and cross-market surveillance has made it easier to detect illicit activity. Of particular concern to FINRA are algorithmic trading controls that firms have deployed to regulate their trading. FINRA will continue to monitor whether firms have adequate controls in place to shut their algorithm down if it exceeds certain trading limits or malfunctions.

In conjunction, last month the SEC approved a rule requiring algorithmic trading developers to register as securities traders, as part of an ongoing effort to ensure compliance and avoid problematic conduct.

Call a Los Angeles Stock Fraud Attorney Today

If you believe your broker or brokerage firm has engaged in illicit activity, or if you work for a brokerage firm engaged in manipulative trading, you may have certain legal rights either as a plaintiff or as a SEC whistleblower that require your immediate attention.

Contact an experienced Los Angeles stock fraud lawyer today for a consultation to discuss your rights and options.

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FINRA Files Algorithmic Trading Plan With SEC

The Financial Industry Regulatory Authority (FINRA) filed a proposed rule with the Securities & Exchange Commission (SEC) that would require algorithmic trading developers to register as securities traders.

The proposed rule would require individuals who design, develop, or modify algorithmic strategies (as well as supervisors) to adhere to the same standards applied to other FINRA-registered securities traders. The rule defines “algorithmic trading strategy” as any automated system that generates or routes orders, any strategy that creates or liquidates baskets of securities, or any program that divides larger orders into smaller ones less likely to impact the market.

According to FINRA, the proposed rule has been put forward because traders increasingly rely on algorithmic strategies as a part of their investment portfolio. Accordingly, these people should have a minimum standard of knowledge regarding securities rules and regulations.

If the new rule were to take effect, algorithmic trading system developers would have to pass an exam to qualify and register as a securities trader. FINRA believes this will weed out problematic conduct, such as faulty risk management. Only those primarily responsible would be required to take the test, and the decision of who is primarily responsible would be up to the firm to decide.

Opponents of the rule feel it places an unnecessary burden on developers and could have the effect of discouraging well-qualified developers from taking on such a task.

Call a Los Angeles Securities Attorney Today

If you have questions about how these programs work, or suffered an investment loss based on a faulty automated investment program, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles securities attorney for a consultation today.

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