SEC ANNOUNCES FINES, CENSURE OF AMERIPRICE FINANCIAL FOR F-SQUARED ALPHASECTOR STRATEGIESThe Securities and Exchange Commission (“SEC”) has censured and fined Ameriprise Financial for its continued use of F-Squared AlphaSector strategies in its marketing to clients, even after learning that the AlphaSector strategies were based on flawed calculations.

The F-Squared AlphaSector strategies were a mathematical algorithm which purported to calculate an appropriate buy or sell “signal” for nine exchange traded funds (“ETFs”) for nine industries across the S&P 500 index. The formula, however, miscalculated the historical performance of AlphaSector by incorrectly implementing signals earlier than when the signals could have actually occurred. This miscalculation resulted in highly inflated back-tested historical performance data.

In 2014, F-Squared admitted wrongdoing in falsifying performance numbers in its advertising materials and payed a $35 million fine to the SEC. Previously, however, by October 2013, F-Squared had informed Amerprise of the flaw in its system and instructed Ameriprise to remove references to its advertising materials to performance information from F-Squared for periods prior to 2008.

Instead, Ameriprise continued to base sales presentations on the flawed performance claims and did not do its own due diligence, according to the SEC. The SEC also noted that Ameriprise failed to adopt and implement adequate policies and procedures that would have prevented it from promoting the inaccurate data to its clients. The SEC ordered Ameriprise to pay $1.75 million in penalties and to disgorge $6.3 million in profits earned from its flawed marketing materials.

If you or someone you know lost money in an Ameriprise account as the result of unsuitable or misrepresented investments, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.