Ameriprise bracing for $50 million penalty over messaging

investmentnews.com:

Ameriprise Financial Services is the latest major broker-dealer to reveal that it’s expecting a significant penalty from regulators as a result of unapproved electronic communications by financial advisors and employees, disclosing last month that it’s preparing to book up to a $50 million expense to resolve the issue with the Securities and Exchange Commission.

Ameriprise is next in a long line of firms to either reveal that they had paid fines and penalties to the SEC to resolve the communications issue or were preparing to do so.

LPL Financial also reported last month that it was on the hook for a $50 million settlement and penalty from the SEC over compliance failures in keeping records of financial advisors’ and employees’ electronic communications, such as text messages and apps.

The dollar amount of the potential penalty facing Ameriprise stands out, particularly as the SEC penalized 16 wealth management firms a total of $81 million, also in February, over mishandled electronic communications, one compliance executive noted.

Ameriprise Financial Services, the broker-dealer arm of Ameriprise Financial Inc., “has responded to SEC document and information requests regarding the preservation of certain business-related communications sent on electronic messaging platforms that have not been approved by the company,” according to the firm’s 2023 annual audited financial statement, or Focus report, filed February 23 with the SEC.

“During 2023, the company recorded a $50 million accrual for this matter, which is reflected in the statement of financial condition in other liabilities,” according to the filing. “The company has reached an agreement in principle with the {SEC} staff, subject to commission approval, that