RiverSource (Ameriprise) Fined $5M For Improper Annuity Switches

RiverSource (Ameriprise) Fined $5M

RiverSource Distributors, which operates as a subsidiary brokerage firm of Ameriprise, has been asked to pay a fine of $5 million by the Securities and Exchange Commission (SEC). The fine has been levied for variable annuities related to alleged violations. It has emerged that the sales strategy employed by many employees of RiverSource required customers to switch annuities, the sole purpose of which seems to be to boost sales commission earnings for the firm.

Did you invest in an annuity with RiverSource and are not sure about the investment? Contact Haselkorn & Thibaut, P.A. at 1-800-856-3352 for a free consultation.

The Case


As per the SEC order, employees of RiverSource pursued an aggressive strategy to connect with the clients of Ameriprise brokers to switch their variable annuities (VAs). That the strategy was driven by the desire to earn commissions seems to be revealed by some lists emerging which were color-coded to indicate from which customers’ commissions could be earned.

Their switching efforts seem to have led to a year-on-year increase in VA sales, peaking at $1.049 million in 2018, from $671 million in 2015. When the compliance department of RiverSource stepped in and asked that the practice of switching be stopped by employees, the number for 2019 dropped to $839 million, the first drop against the previous year since 2015.

The VA switching was done by RiverSource through Ameriprise Financial Services.

Interestingly, under Section 11 of the Investment Company Act of 1940, this is the first-ever case of enforcement pursued by the SEC in which RiverSource has been charged with “improper switching or replacing variable annuities.”

Though it is not illegal to switch a VA, there seems to be no logical case for a customer to do so. The downside seems to be a lot more defined, with surrender charges and additional commissions, plus potentially higher yearly costs.

Annuity Churning and Insurance Fraud

Insurance churning is an act of misconduct by an insurance agent. In this practice, the agent will purposely place their clients’ policies with another insurer without telling them. The motivations for this practice typically include differences in commission rates between insurers and special incentives offered by one. Insurance churning is illegal in most states, and insurance agents are obligated to put their clients’ best interests above their own.

If you are interested in purchasing life insurance, be wary of salespeople who contact you by phone. Always check the agent’s credentials by calling their employer or your state’s department of insurance. Look for life insurance companies with excellent ratings from Bankrate, and read the terms of the policy carefully before signing anything. If you are unsure about anything, consult a financial advisor to review the policy before you make any decisions.

When an insurance agent approaches you about a potential policy, he or she may use intense sales pressure tactics, such as urging you to purchase a new policy immediately. The price of an insurance policy offered by one company is between fifteen to twenty percent lower than the premiums offered by other companies that offer comparable coverage. Additionally, contact information for the insurers may be difficult to find. If you suspect your agent of churning insurance, you should contact the NAIC and seek advice.

Insurance companies do not tolerate the churning of policies. The law requires that agents notify the insured of any change in their policies and provide official documentation to support the changes. Even if agents are legally authorized to replace coverage for their clients, it is considered illegal when the sole purpose of the replacement is to enrich the agent. If you are a victim of insurance churning, you can get the money back you lost in the process.

Legal support

While broker-dealers are required to protect clients from broker misconduct or negligence, there are times when greed takes precedence.

Haselkorn & Thibaut, P.A. has represented retail investors and other customers in their efforts at recovering losses from brokerage firms and has over 50 years of experience. Our attorneys are already engaged in investigating instances of customers losing money in the VA switching transactions involving RiverSource.

If you have had to deal with Ameriprise Financial or have suffered losses as a result of RiverSource recommendations, we encourage you to reach out to one of our expert annuity and annuity lawyers immediately to understand your legal options. They can be reached at 1-800-856-3352.


Though RiverSource has desisted from admitting or denying the charges, they have agreed to the fine, cease-and-desist order, and censure levied by the SEC.

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