Federal Judge Upholds $22 Million Ruling Against Brokerage Firm
A Louisiana federal judge has upheld a $22 million award to 32 former Exxon Mobil Corp. workers who said a broker employed by Securities America Inc. put their retirement money into inappropriate, risky investments. Securities America is a subsidiary of Ameriprise Financial Inc. The court's decision was based on an arbitration ruling in May and included punitive damages in the award. In a related proceeding, the brokerage regulator National Association of Securities Dealers, Inc. (NASD) fined Securities America an additional $2.5 million for failing to supervise the broker. The company was ordered to pay $13.8 million that had been part of the May arbitration settlement in restitution to the former Exxon workers. The firm agreed to the NASD payouts. Securities America will hire a consultant to review procedures.
According to the NASD, McFadden would lure Exxon workers, typically ages 50 to 60, into moving retirement money into investments he recommended, with "unreasonable and exaggerated promises of high returns." Ameriprise is a financial planning and services company based in Minneapolis. Securities America maintains separate services and product offerings. In a separate consumer alert, the NASD, which is the securities industry's self-regulatory arm, said workers should be cautious before swapping a company pension for investments whose values fluctuate, such as mutual funds and variable annuities.
