The Financial
Industry Regulatory Authority (“FINRA”) announced a fine of $750,000 against Ameriprise
Financial Services, Inc (“Ameriprise”) and its affiliated clearing firm,
Ameriprise Enterprise Investment Services, Inc. (“AEIS”). The fine was levied against the firms “for
failing to have reasonable supervisory systems in place to monitor wire
transfer request.” Though the fine
relates to a compliance issue, the circumstances uncovering the supervisory
issues involved an investment fraud perpetrated by an Ameriprise
representative, Jennifer Guelinas.
Guelinas, who
is now barred from the securities industry (click here for more info), defrauded investors through a
series of fraudulent transfers from clients’ accounts to accounts controlled by
her. This scheme took place from
December of 2006 until October of 2010, during which time Guelinas converted
over $500,000 from clients’ brokerage accounts.
Sadly, the three clients involved in this securities fraud were senior
citizens.
While neither
affirming nor denying the charges, Ameriprise and AEIS consented to FINRA’s
finding of failure at the firms to detect multiple red flags concerning Guelinas. As stated by Brad Bennett, Executive Vice
President and Chief of Enforcement at FINRA, "Ameriprise and its
affiliated clearing firm missed numerous supervisory red flags, including the
fact that two of the wire transfers went to accounts in Guelinas' name. Firms
must have robust supervisory systems to monitor and protect the movement of
customer funds."
This
fraudulent arrangement was only possible because of Ameriprise’s failure to
detect this long-operating scheme. Altogether,
Guelinas forged the signatures of her clients over 80 times on wire transfer
requests. This is in addition to forging
clients’ signatures on three real estate closing agreements and one promissory
note.
