SEC v. American Express Financial Advisors Inc

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UNITED STATES OF AMERICA 

Before the
 

SECURITIES AND EXCHANGE COMMISSION 


SECURITIES ACT OF 1933 
Release No. 8638 / December 1, 2005 

SECURITIES EXCHANGE ACT OF 1934 
Release No. 52862 / December 1, 2005 

ADMINISTRATIVE PROCEEDING 
FILE NO. 3-12115 

: 
In the Matter of :

 : 
American Express : ORDER DIRECTING APPOINTMENT 
Financial Advisors Inc. : OF TAX ADMINISTRATOR 
(now known as Ameriprise : 

Financial Services, Inc.), : 


:

 Respondent. : 

________________________: 


By order dated December 1, 2005, the Commission ordered Respondent American 
Express Financial Advisors Inc. (now known as Ameriprise Financial Services, Inc.) 
(“AEFA”) to pay disgorgement and prejudgment interest and a civil monetary penalty in the 
total amount of $30 million to the Commission (the “Distribution Fund”) within 60 days of 
the entry of the order.  The Commission has solicited proposals from several tax firms and 
has determined that Damasco & Associates, located in San Francisco, California, is best 
suited to act as tax administrator in this proceeding.  

Accordingly, IT IS ORDERED that: 

A. 	 Pursuant to Rule 1105(a) of the Commission’s Rules on Fair Fund and 
Disgorgement Plans, Damasco & Associates be appointed as tax 
administrator (the “Tax Administrator”) for the Distribution Fund with 
limited authority and power to:  (1) act as the administrator for tax purposes 
for the qualified settlement fund (“QSF”); (2) prepare, sign and file the 
necessary tax returns and tax-related documents for the Distribution Fund; 
(3) obtain the necessary tax-related documents and identifiers, such as an 
employee identification number, on behalf of the Distribution Fund; (4) 
perform other tax-related and reporting duties on behalf of the Distribution 
Fund as required by Department of the Treasury regulations relating to 
QSF administrators; and (5) communicate on behalf of the Distribution 
Fund on matters set forth in this paragraph.  



 

  
 

 

 

 

  
 
 

 
        
 
 

B. The bond requirement of Rule 1105(c) of the Commission’s Rules on Fair  
Fund and Disgorgement Plans is waived for good cause shown, 
specifically, as further described below, because the Tax Administrator 
shall never have custody or control of the Distribution Fund; 

C. 	 The Tax Administrator shall submit, at least 30 days prior to any date on 
which a tax payment is required on behalf of the QSF, or as soon as is 
practicable, documents showing the amount necessary to satisfy the tax 
liability of the QSF as well as all other documents supporting such 
amount.  The Tax Administrator shall submit such documents to the 
Office of Financial Management (“OFM”), Securities and Exchange 
Commission, Operations Center, 6432 General Green Way, Stop 0-3, 
Alexandria, VA 22312, with a copy to the assigned staff member.  OFM 
shall pay the amount of the documented taxes to the Tax Administrator by 
check or wire transfer from the Distribution Fund.  Such tax payments will 
come first from any earnings or interest in the QSF, and second, if 
necessary, from the principal of the QSF.  The Tax Administrator, in turn, 
shall be responsible for paying the taxes to the IRS and the relevant state 
taxing authority, if any, on behalf of the Distribution Fund.   

D. 	 The Tax Administrator shall comply with all reporting requirements 
applicable to a qualified settlement fund as defined in Treasury 
Regulations Section 1.468B-1(a), as amended, and shall file on a timely 
basis all required federal, state, and local tax returns, and shall 
contemporaneously provide copies of such filings to the assigned 
Commission staff member.   

E. 	 The Tax Administrator shall keep records and bill each QSF for the 
services provided to it.  Each bill shall be reviewed by the assigned 
Commission staff member.  The Tax Administrator will submit the bill to 
the Respondent for payment by check or wire transfer.  The fees billed 
shall be as agreed upon in the Tax Administrator’s engagement letter 
accepted by the Commission on March 8, 2005. 

By the Commission. 

Jonathan G. Katz 
Secretary 

2

________________________ 
                             

    
  

 

  
    

 
  

 

 
 
 

 

 

    

UNITED STATES OF AMERICA 

Before the
 

SECURITIES AND EXCHANGE COMMISSION 


SECURITIES ACT OF 1933 
Release No. 8638 / December 1, 2005 

SECURITIES EXCHANGE ACT OF 1934 
Release No. 52862 / December 1, 2005 

ADMINISTRATIVE PROCEEDING 
FILE NO. 3-12115 

: 
In the Matter of :

 : 
American Express : ORDER DIRECTING APPOINTMENT 
Financial Advisors Inc. : OF TAX ADMINISTRATOR 
(now known as Ameriprise : 

Financial Services, Inc.), : 


:

 Respondent. : 

________________________: 


By order dated December 1, 2005, the Commission ordered Respondent American 
Express Financial Advisors Inc. (now known as Ameriprise Financial Services, Inc.) 
(“AEFA”) to pay disgorgement and prejudgment interest and a civil monetary penalty in the 
total amount of $30 million to the Commission (the “Distribution Fund”) within 60 days of 
the entry of the order.  The Commission has solicited proposals from several tax firms and 
has determined that Damasco & Associates, located in San Francisco, California, is best 
suited to act as tax administrator in this proceeding.  

Accordingly, IT IS ORDERED that: 

A. 	 Pursuant to Rule 1105(a) of the Commission’s Rules on Fair Fund and 
Disgorgement Plans, Damasco & Associates be appointed as tax 
administrator (the “Tax Administrator”) for the Distribution Fund with 
limited authority and power to:  (1) act as the administrator for tax purposes 
for the qualified settlement fund (“QSF”); (2) prepare, sign and file the 
necessary tax returns and tax-related documents for the Distribution Fund; 
(3) obtain the necessary tax-related documents and identifiers, such as an 
employee identification number, on behalf of the Distribution Fund; (4) 
perform other tax-related and reporting duties on behalf of the Distribution 
Fund as required by Department of the Treasury regulations relating to 
QSF administrators; and (5) communicate on behalf of the Distribution 
Fund on matters set forth in this paragraph.  



 

  
 

 

 

 

  
 
 

 
        
 
 

B. The bond requirement of Rule 1105(c) of the Commission’s Rules on Fair  
Fund and Disgorgement Plans is waived for good cause shown, 
specifically, as further described below, because the Tax Administrator 
shall never have custody or control of the Distribution Fund; 

C. 	 The Tax Administrator shall submit, at least 30 days prior to any date on 
which a tax payment is required on behalf of the QSF, or as soon as is 
practicable, documents showing the amount necessary to satisfy the tax 
liability of the QSF as well as all other documents supporting such 
amount.  The Tax Administrator shall submit such documents to the 
Office of Financial Management (“OFM”), Securities and Exchange 
Commission, Operations Center, 6432 General Green Way, Stop 0-3, 
Alexandria, VA 22312, with a copy to the assigned staff member.  OFM 
shall pay the amount of the documented taxes to the Tax Administrator by 
check or wire transfer from the Distribution Fund.  Such tax payments will 
come first from any earnings or interest in the QSF, and second, if 
necessary, from the principal of the QSF.  The Tax Administrator, in turn, 
shall be responsible for paying the taxes to the IRS and the relevant state 
taxing authority, if any, on behalf of the Distribution Fund.   

D. 	 The Tax Administrator shall comply with all reporting requirements 
applicable to a qualified settlement fund as defined in Treasury 
Regulations Section 1.468B-1(a), as amended, and shall file on a timely 
basis all required federal, state, and local tax returns, and shall 
contemporaneously provide copies of such filings to the assigned 
Commission staff member.   

E. 	 The Tax Administrator shall keep records and bill each QSF for the 
services provided to it.  Each bill shall be reviewed by the assigned 
Commission staff member.  The Tax Administrator will submit the bill to 
the Respondent for payment by check or wire transfer.  The fees billed 
shall be as agreed upon in the Tax Administrator’s engagement letter 
accepted by the Commission on March 8, 2005. 

By the Commission. 

Jonathan G. Katz 
Secretary 

2