Securities America is a wholly owned subsidiary of Ameriprise Financial. It was founded in 1984 and is headquartered in Omaha, Nebraska. It currently claims more than 1,800 licensed broker and advisors nationwide, who manage more than $36 billion for 300,000 to 400,000 clients.
Securities America brokers are independent contractors and the firm operates as an “introducing” brokerage firm, and is thus primarily a sales firm. Its account custody and back office operations are performed through a “clearing firm.” It currently reports its clients accounts are held at the clearing firms of National Financial Services and Pershing.
Securities America Advisors, Inc., an investment advisory subsidiary which handles fee based accounts, was founded in 1993 and is an SEC registered investment advisory firm. It currently claims to have $13 billion is assets under management and that it offers “education, advice and implementation of retirement planning and other wealth management strategies through Registered Investment Advisors nationwide”.
Particular problems can in brokerage accounts at clearing firms when the broker is employed by a separate introducing firm. As well, brokerage firms with independent contractor brokers often face difficulties supervising these brokers located in widespread offices operated by the brokers or located in brokers’ homes. Securities America has not been exempt from such problems.
Our law firm represents institutional and individual investors nationwide with significant losses in their portfolios, retirement plans and investment accounts. Our attorneys and staff have more than 100 years of combined experience in the securities industry and in securities law. Several of our lawyers served for years as Vice President or Compliance Officer of brokerage firms.
Each lawyer and staff member of our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent. Each attorney at our firm has experience representing investors in securities arbitration claims and/or lawsuits. We have handled in more than thousand cases against hundreds of large and small brokerage firms, including Securities America.
Call us at (800) 259-9010 or contact us through our Website to arrange a free confidential consultation with an attorney to discuss your experiences with an investment advisor or financial firm which resulted in losses.
The National Association of Securities Dealers fined Securities America $2.5 million for failing to supervise an advisor who allegedly lured clients into early retirement with exaggerated promises of high returns. The firm was also ordered to pay $13.8 million in restitution to victims and to hire a consultant to review its supervisory procedures.
According to the NASD, a Securities America representative offered a group of Exxon Corp. retirees unreasonable and exaggerated promises of high returns from reinvested funds from their company retirement plans. Seminars were held in which Exxon employees between the ages of 50 and 60 were advised to liquidate of their company 401(k) and pension plan assets and deposit the funds into Securities America accounts.
The retirees were then sold variable annuities, Class B or Class C mutual fund shares and exchange-traded funds (ETFs), according to the NASD, adding that the representative “engaged in discretionary and in some cases unauthorized variable annuity sub-account exchanges and mutual fund switches.”
The NASD’s Executive Vice President and Head of Enforcement added that “in this case, Securities America’s lack of supervision resulted in Exxon employees being fraudulently induced into retiring early based upon false and misleading projections of future investment returns on their nest eggs.”
An arbitration panel for the NASD ordered Securities America to pay up to $9.3 million to three retired American Airlines pilots who claimed that the company’s broker improperly invested their retirement savings into risky mutual funds with high fees and trading costs. The arbitration award includes $3,9 million in damages, plus $3 million in punitive damages and an additional $2.4 million for legal fees.
According to the victorios American Airlines pilots, the broker initially purchased products from the American Mutual Funds Group, but later liquidated the funds and directed their money into aggressive Rydex funds, which he then traded on a nearly daily basis.
It is rare that securities arbitrators award punitive damages to investors and it is therefore assumed by most observers that the treatment of these retirees, as presented to the arbitrators in the hearings, was considered by them to be eggregious.
In May 2006, an NASD Securities Arbitration Panel ordered Securities America to pay $22 million to a group of 32 retirees. The brokerage firm later appealed the order, moving to vacate the arbitration award in a Lousiana Court, but lost.
The victims claimed a Securities America representative promised them a rosy picture if they invested through him and his firm, yet their accounts later plummeted in value. The claims also included that the broker failed to disclose the high fees he and his firm would earn on the kind of investments – variable annuities and mutual fund B-shares- that he was recommending that they purchase.
According to the retiree-victims’ attorney: “This was a group of mostly blue-collar, hard-working people who put their faith in this securities company and their broker. The arbitration panel agreed with us that [the broker] and Securities America betrayed that faith, leading to a substantial loss of much of their retirement savings.”
“My clients were told they would be able to enjoy a lifestyle equal to the one they had while working. Instead, many of them ended up going back to work as Wal-Mart greeters, stocking vending machines or other jobs paying a fraction of what they formerly earned,” the attorney added.
In the first case of its kind, the National Association of Securities Dealers (NASD) fined Securities America $375,000 for improperly sharing directed brokerage commissions from a mutual fund company with a former Securities America broker in the Los Angeles, CA area. The NASD also found that Securities America failed to adequately supervise its agent.
The NASD charged the Securities America agent with improperly receiving directed brokerage commissions and other compensation of more than $280,000. He was also charged with misrepresenting and failing to disclose this compensation to his clients, a union retirement plan, at the same time he was advising those clients to maintain or include the fund company’s mutual funds in the retirement plans they offered to working and retired union members.
“NASD will vigorously challenge all conduct that impermissibly compromises a broker’s objectivity, especially when retirement money is at stake,” said an NASD spokesman. “In this case, Securities America approved [its agent’s] improper arrangement to receive directed brokerage commissions … This violation of NASD’s rules … made for an intolerable situation.”