U.S. regulators have settled market timing, directed brokerage and revenue sharing charges with American Express Financial Corporation, now known as Ameriprise Financial Inc.

The U.S. Securities and Exchange Commission announced settled enforcement proceedings against Ameriprise on allegations that it acted contrary to prospectus disclosures when it allowed certain shareholders to market time the mutual funds it advised, the American Express Funds when the AXP Funds’ prospectus disclosures expressly prohibited market timing.

As part of its settlement with the commission, Ameriprise will pay US$15 million in disgorgement and civil penalties, all of which will be placed in a Fair Fund for distribution to certain shareholders of the AXP Funds. It also agreed to certain undertakings, including making annual presentations to its board of directors and the AXP Funds’ boards of directors about the adequacy of its policies and procedures on market timing.

In addition to the US$15 million payment, the firm has agreed to be censured and to cease and desist. It consented to the order without admitting or denying the findings. The commission’s action was filed contemporaneously with a related action by the Minnesota Division of Securities.

In a separate action, the firm also settled allegations with the SEC that it failed to adequately disclose millions of dollars in revenue sharing payments that it received from a select group of mutual fund companies.

As part of that settlement, it will pay US$30 million in disgorgement and civil penalties. It also agreed to make certain disclosures to its customers about its revenue sharing program. Again, it consented to the order without admitting or denying its findings.

The commission’s order finds that Ameriprise began receiving substantial revenue sharing payments and directed brokerage commissions from certain mutual fund families for distribution of fund shares starting in 2001. Since that time, affiliates of these mutual fund families have paid it tens of millions of dollars each year in cash and non-cash revenue sharing payments. With one exception, it only offered fund families whose affiliates made revenue sharing payments.

In this case, the commission’s action was filed contemporaneously with related actions by the National Association of Securities Dealers and the Minnesota Division of Securities.

The NASD announced that it has fined Ameriprise US$12.3 million in connection with its receipt of directed brokerage in return for providing preferential treatment to certain mutual fund companies. In settling with NASD, Ameriprise neither admitted nor denied the allegations, but consented to the entry of NASD’s findings.

“This case demonstrates that NASD will remain vigilant in its efforts to eliminate conflicts of interest in the sale of mutual funds,” said Barry Goldsmith, NASD executive vice president and head of enforcement.