Tuesday, March 14, 2006

NASD to Ameriprise: Pay up or shut down

According to InvestmentNews.com (free registration required) the NASD has threatened to suspend Ameriprise Financial for failing to pay a $230,000 arbitration award to a former broker.


On March 1, NASD of Washington notified Ameriprise that it has until March 22 to pay a formerly affiliated registered representative, Frank P. Marzano, in its tussle for client information - or else face suspension.

Minneapolis-based Ameriprise faces the dire consequences because of its "failure to comply with the award," according to a letter that was sent to the company and signed by Jennifer L. Kozielski, the NASD case administrator.

"You are hereby given notice of NASD's intent to suspend the firm's membership," because it has yet to comply with the arbitration ruling, she wrote.

The failure to honor an arbitration award is a violation of NASD rules, and the NASD has instituted suspension procedures for firms who do not pay awards in a timely fashion.

It is extremely unusual to see a firm not pay an award, and in particular a firm the size of Ameriprise - which is the former American Express Financial Advisors.

Given the extreme penalty for failing to pay - the suspension would shut down the firm's brokerage operations - one can only wonder what Ameriprise is thinking in allowing this matter to get as far as a suspension letter.

According to the article, the firm has until March 22 to pay the award.
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