After a few weeks of silent but intense negotiation, it looks like Amerprise lawyers have found a way to settle $400 million in claims from aggrieved Securities America clients.
Amerprise has announced that roughly 90% of the investors fighting its Securities America unit have agreed to a $150 million settlement.
This will effectively offer the claimants roughly 45% to 48% of the $400 million they were collectively seeking. If too many of the remaining 10% reject the terms on the table, Ameriprise warns that the deal will be revoked.
The claimants have argued that Securities America failed to do proper due diligence on the medical debt-backed securities it sold them, and that when those investments imploded they lost money.
But with Securities America invested heavily in those same securities, the brokerage firm itself seemed unlikely to be able to pay the full extent of the $400 million its onetime clients were seeking.
Recently, the firm was widely reported as being down to maybe $9 million in cash. Given those circumstances, the claimants -- and Securities America reps, for that matter -- turned their attention to corporate parent Ameriprise for a save.
Ameriprise itself is coming up on its earnings report on Monday, so Wall Street is looking for guidance on how this deal will affect its future results as well as the stock.
Despite some eagerness in the press to see the settlement fall through, it now seems less likely that Securities America is anything like "doomed."
While there are probably hurdles ahead, the prospect of outright bankruptcy is probably remote now. Maybe Ameriprise will end up selling Securities America -- to its employees or to a third party -- as longtime observers widely believe.
Maybe not. Either way, business as usual can now continue and the firm's roughly 1,800 reps can now exhale.