Ameriprise Financial Services will pay $17.3 million to settle charges by the Securities and Exchange Commission (SEC) that it received undisclosed payments to sell real estate investment trusts (REITs) to customers. According to the settlement with the SEC, which was announced July 10, sales of certain REITs provided the Minneapolis-based broker-dealer with $31 million in compensation.
“Few things are more important to investors than getting unbiased advice from their financial advisers,” SEC Enforcement Director Robert Khuzami said in a statement. “Ameriprise customers were not informed about the incentives its brokers had to sell these investments.”
REITs are entities that invest in different kinds of real estate or real estate-related assets, including office buildings, retail stores, and hotels. According to the SEC, neither Ameriprise nor the REITs disclosed to investors that additional payments were being made in connection with the sale of the REIT shares or about the conflicts of interest the additional payments created.
In addition, the SEC found that Ameriprise issued a variety of mislabeled invoices to the REITs as a means of collecting the undisclosed revenue-sharing payments, making them appear as legitimate reimbursements for services provided by Ameriprise.