Posted in: FINRA | Arbitrations | Greedy Brokers | Breach of Fiduciary Duty | Risky Investments | Variable Annuities |
Ameriprise Financial Services and one of its brokers were ordered Friday to pay back $470,000 to an investor, after a FINRA arbitration panel concluded the both parties had covered up evidence of fraudulent investment advice.
According to FINRA, David Tysk of Bloomington, Minnesota had told his 77-year-old client at Ameriprise to invest in $2 million worth of annuities. What he didn’t tell his elderly client, the Wall Street Journal noted, was that these annuities came with unreasonably high surrender rates within the first 10 years of holding.
And on top of that, these investments were heavily taxed and hard to sell.
In FINRA’s full arbitration record, Tysk was found to have altered record of a meeting with the client, Guenther Roth of Wayzata, Minnesota, in which there were complaints of the annuities being unsuitable. When Ameriprise learned of the altered record, they did not notify anyone during discovery-when evidence is presented during the arbitration.
With this in mind, the panel found Ameriprise and Tysk equally responsible for the fine. While $197,000 of the award went to Roth for compensatory damages, the rest went towards baying back arbitrarion fees.
If FINRA’s allegations are true then in addition to harming an elderly client, Ameriprise and Tysk may have harmed any number of investors by simply wasting the panel’s time. FINRA announced recently it would begin widening its pool of arbitrators to deal with an unprecedented number of stockbroker misconduct complaints.
FINRA had to file an emergency motion to discover changes on Tysk’s computer, and the evidence might otherwise gone missing. If Ameriprise was even dragging its feet in telling FINRA about material facts, they were making victims of broker fraud wait even longer to see their cases decided.
Last year this blog mentioned Shane Selewach, an Ameriprise broker who embezzled customer money with fake promises of hedge fund investments and real estate strategies. Though he was supposed to be under the watchful eye of his employing broker-dealer firm, Selewach was able to continue his fraudulent activity for over a year.
Broker firms may claim they have little power to stop any and all broker misconduct, but that sort of excuse falls short. There is a reason why strict supervisory systems are mandatory, why firm entities and individual brokers are registered and monitored.
Stockbrokers can potentially do good for customers, but can also inflict terrible harm, which why Ameriprise has a duty to keep all of its employees under control.
