Ameriprise Financial Inc. and its subsidiary, Securities America Inc., have reached independent settlements with investors who purchased private placements that have gone bust, InvestmentNews reported.

Two weeks ago, Securities America reached a $21 million preliminary settlement with the class-action plaintiffs who sued both companies in 2009, the same year that the Securities and Exchange Commission charged both Medical Capital and Provident Royalties LLC with fraud.

The litigation stems from dozens of independent broker-dealers, including Securities America, who sold two series of private placement deals that left investors with tens of millions of dollars of losses.

Securities America clients are looking at nearly $400 million in losses from the private placements, which were sponsored by Medical Capital and Provident Royalties, according to Ameriprise’s annual report released this week.
According to an unidentified attorney said to be familiar with the matter, InvestmentNews reported that Ameriprise has now reached a $27 million settlement with investors. Ameriprise’s liability is related to the fact that it was a “control person” in respect to Securities America, said Dan Girard, the lead plaintiff’s attorney for the investors in the class-action lawsuit.

Over the past two years, lawsuits and legal costs have put out of business a number of small to mid-sized independent broker-dealers that sold high-risk private placements.