Ameriprise Broker Wins Expungement, Arbitrator Grimaces
Richard B. Pitt, an independent broker with Ameriprise Financial Services, won expungement from his 22-year regulatory record of a complaint alleging unsuitability and misrepresentation of some investments this week, but it was not an unalloyed victory.
One of the three arbitrators on the Financial Industry Regulatory Authority panel in San Francisco that granted the expungement issued a terse dissent that appeared intended to at least make Ameriprise wince.
“My dissent is intended to provide an incentive for fuller disclosure of the expenses and excess fees associated with the investments that Pitt recommended, e.g. 10% front end load [sic],” David M. Achterkirchen wrote, without further explanation.
Underlying the expungement award was a claim brought against Ameriprise in 2015 by San Francisco architects Susan Coghlan and Hugh Cotter involving recommendations of three real estate investment trusts and at least two variable annuities that were underwritten by Ameriprise affiliate RiverSource Life Insurance Co. PItt was not named as a respondent in the complaint.
Privately traded REITS and variable annuities have generically been criticized by consumer advocates for carrying high commissions, and sales have fallen since the Department of Labor’s fiduciary rule governing retirement investments became partly effective this year.
Pitt, who has been an independent contractor and sometime manager at Ameriprise and predecessor firms since 1996, was not named in the couple’s complaint.
“That’s his decision,” he said on Friday from his office in Sonoma, when asked to comment on the arbitrator’s statement and its accuracy.
The majority of the arbitration panel ruled in their expungement award that the “essential allegations against Pitt are false, in that he did not recommend unsuitable investments, he did not misrepresent the nature of the investments at issue, and he did not fail to provide adequate disclosures.”
Their statement does not mention fees or commissions.
Achterkirchen, a Yale-educated organic chemistry major with a law degree from the University of California at Berkeley, said that his fellow arbitrators’ ruling was justifiable, but that he wanted to make a statement about brokers’ duties of care despite the investments at issue having been made nearly a decade before the DOL rule became effective.
Part of the new rule requires brokers and firms to receive “reasonable” compensation.
“Clearly Pitt was not a party to the case, no question about it, but nevertheless he was their financial advisor, the person who chose those investments,” Achterkirchen said in a phone interview. “My position was that he should have done better by his clients.”
Pitt’s BrokerCheck record as of Friday records a May 2015 complaint alleging that between 2007 and 2015 Ameriprise recommended REITs and variable annuities that the customers said were misrepresented, inadequately disclosed and “unsuitable to their investment objectives.”
Ralph Jacobson, the San Francisco lawyer who chaired the panel, said that in his experience the type of dissent penned by Achterkirchen was unusual, but he declined to elaborate on deliberations or the merits of the underlying case and expungement request. “You certainly learn something new every time,” he said.
Ameriprise settled the initial $234,103 claim for $25,000 “in order to avoid the costs associated with FINRA arbitration,” Pitt wrote on his regulatory record. He also noted that he was not a named party in the complaint and disputed the allegations.
“Ameriprise settled the matter in order to avoid the costs associated with FINRA arbitration,” he commented.
Christopher Mader, the lawyer who represented the couple who brought the complaint, said they did not take a position on the expungement request and declined further comment.
Spokespeople at Ameriprise did not respond to requests for comment on the dissent.
Achterkirchen is a sole practitioner in San Francisco who primarily represents high-tech companies, according to his firm’s .