NASD Charges Ameriprise Unit $93 Million

An arbitration panel organized by the NASD has 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 Wall Street Journal reports.

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 airline 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.

An Ameriprise spokesman said, “Securities America sought in good faith to resolve this matter prior to the arbitration, and now that we have received the panel’s award, we will work with the clients to arrange for prompt payment to them.”