RiverSource Distributors Fined $5M For Switching Variable Annuities

RiverSource Distributors Accused of Targeting Retail Ameriprise Financial Customers With VA Sales

The US Securities and Exchange Commission (SEC) is ordering Ameriprise’s subsidiary brokerage firm, RiverSource Distributors, to pay a $5M fine for alleged violations involving variable annuities (VAs). The regulator contends that several RiverSource employees came up with a sales strategy that caused holders of these products to switch annuities. This purportedly resulted in enhanced sales commissions and boosted VA sales revenues for the firm.

The SEC said that RiverSource Distributors sold the VA exchanges to retail customers through Ameriprise Financial Services. It charged RiverSource with “improper switching or replacing variable annuities.” The case is the SEC’s first-ever enforcement proceeding under the Investment Company Act of 1940’s Section 11.

While it isn’t illegal to exchange VAs, there are no grounds for recommending that an investor switch to another variable annuity. It may even prove unsuitable for the customer while offering them no benefit. It also may result in additional fees, including surrender charges and higher yearly costs.

Our experienced investment attorneys are looking into claims of losses by Ameriprise Financial customers who may have been harmed by these alleged violations involving RiverSource. Broker-dealers must protect their clients from broker misconduct or negligence.

Variable Annuities Switching Allegedly Increased Sales from $671M to $1,049M

The SEC’s order said that RiverSource employees allegedly put into place virtual and in-person meetings with Ameriprise brokers to persuade the latter’s clients to switch their VAs. RiverSource Distributors’ employees even allegedly color-coded lists of customers to indicate that commissions could be earned.

The regulator said that these alleged actions led to a rise in variable annuity exchanges for the firm from $671M in 2015 to:

2016: $768M
2017: $1.006M
2018: $1.049M

The regulator said that in early 2018, RiverSource’s compliance department sought to stop these variable annuities sales practices by its employees. In 2019, VA exchanges dropped to $839M. RiverSource agreed to the SEC’s cease-and-desist order, fine, and censure but without denying or admitting the charges.

Seasoned VA Securities Lawyers

For over 30 years, SSEK Law Firm has represented retail investors and other customers in recouping their losses from brokerage firms. If you were an Ameriprise Financial customer that suffered losses at the recommendation of RiverSource Distributors, seek legal advice today. Call our skilled variable annuity securities lawyers at (800) 259-9010.