COURT APPROVES $100 MILLION SETTLEMENT IN CLASS ACTION AGAINST AMERICAN EXPRESS FINANCIAL ADVISORS
SAN FRANCISCO, CA: On July 19, 2007, U.S. District Court Judge Deborah A. Batts, Southern District of New York, entered an order granting final approval of a $100 million settlement of the class action lawsuit brought by customers of American Express Financial Advisors (“AEFA,” now known as Ameriprise Financial Services, Inc.) NYSE: AMP. As part of the settlement, AEFA also agreed to adopt and implement specific remedial measures.
The settlement resolves claims that AEFA violated federal securities laws and breached fiduciary duties by perpetrating a scheme to defraud its investing clients. Specifically, it is alleged that AEFA, while claiming to provide objective financial planning and advice tailored to its clients, actually dispensed standardized recommendations and employed incentive programs for financial advisors to sell American Express proprietary products. AEFA has denied any wrongdoing or that its clients have suffered any damages.
This settlement resolves five consolidated actions filed in New York, plus a related action in Arizona. The class was represented by lead attorney, Daniel Girard of Girard Gibbs in conjunction with co-lead counsel from the law firms of Milberg Weiss LLP and Stull, Stull & Brody. Plaintiffs in the Arizona case were represented by lead attorneys from Zimmerman Reed and Lockridge Grindal Nauen.
Following a final approval hearing held on July 13, 2007, the Court approved the settlement as fair, reasonable and adequate. Under the settlement terms, the Company will pay $100 million to individuals who purchased financial advice, financial plans or other financial advisory services from AEFA. In addition to the settlement fund, AEFA is also responsible for the costs of settlement and claims administration, estimated between $15 million and $18 million.
Of the 2.8 million potential claimants who received notice of the settlement, more than one million claims have been filed. This figure represents significant participation in the settlement. The Court acknowledged that by voting with their feet, the vast number of claimants demonstrated the fairness of the settlement. According to lead attorney for the class, Daniel Girard, “We are very pleased to have obtained over $115 million in value for the class members. The relative percentage of claimants is one of the highest we have ever seen and with that level of participation, we are confident that the best interests of the class have been served through the resolution of this litigation.”
Additional information concerning the settlement and a copy of the Final Judgment and Order can be obtained at www.financialfeesettlement.com