Ameriprise and Affiliated Clearing Firm Fined for Failing to Supervise Transfer of Customer Funds

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.