Ameriprise Financial Services Pays $375,000 Regarding REITs and BDCs Sales to New Jersey Customers
Posted on Thursday, November 1st, 2018 at 10:00 am
Erez Law is currently investigating Ameriprise Financial Services financial advisors across the country regarding unsuitable alternative investments in client portfolios.
In October 2018, Ameriprise Financial Services, Inc., based in Minneapolis and with branch offices in New Jersey, agreed to pay $375,000 to resolve an investigation into its sale of alternative investments in New Jersey. The Bureau of Securities within the Division of Consumer Affairs found that Ameriprise “sold unsuitable non-traded real estate investment trusts (REITs) and non-traded business development companies (BDCs) to customers, did not reasonably supervise the sale of these alternative investments, and did not keep required books and records.” The relevant time period was between 2010 and 2015, when Ameriprise sold at least 23 alternative investment offerings, including 17 non-traded REITs and 6 non-traded BDCs in approximately 8,147 transactions in New Jersey, and representing $215,219,131 in sales to approximately 3,535 New Jersey customers, generating commissions of at least $21 million from the sales.
REITs are entities that generally own and often manage income-producing real estate. BDCs are entities that generally invest in small and mid-sized businesses. Non-traded REITs and non-traded BDCs are typically illiquid, and they have no public trading market and a liquidity event typically occurs within five to seven years of an offering’s inception.
According to the announcement, “Unlike publicly-traded REITs and publicly-traded BDCs, non-traded REITs and non-traded BDCs have certain characteristics that make them riskier for investors. They may contain higher commissions and fees, are generally illiquid as they have no public trading market, and pay distributions from invested capital back to investors, or from debt, as opposed to providing distributions of earnings from real estate holdings.”
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Ameriprise Financial Services may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.