Ameriprise Unit Charged $93 Million by NASD
January 8, 2007
An arbitration panel organized by the NASD found a unit of Ameriprise, Securities America, and one of its stockbrokers guilty of steering three retired airline pilots into high-fee mutual funds.
The panel awarded the three $9.3 million plus interest. This includes $3.8 million in compensatory damages and $2.5 million in costs and attorney fees, payable by Securities America and the broker, Robert Gormly. In addition, the brokerage firm must pay $3 million in punitive damages. Interest is payable on the $3.8 million, beginning Jan. 1.
The three investors, Thomas Cain, Charles Snyder and Robert Shall, met Gormly at American Airlines, where all four worked. Gormly then went on to become a broker, securing the pilots as clients.
According to the plaintiffs, Gormly invested the majority of their money in Rydex Investments mutual funds with high fees and trading costs, causing them significant losses.
(c) 2007 Money Management Executive and SourceMedia, Inc. All Rights Reserved.