NEW YORK — Working out of an Ameriprise Financial Services Inc. branch in Orlando, Fla., Christopher Coulther offered his clients a deal that was hard to resist. Promising a 100 percent return on Costa Rican real estate, he enticed 98 people to invest almost $12 million.

Unknown to customers, Ameriprise, the largest U.S. financial planning company, hadn't approved the offer, even though Coulther had asked for the firm's blessing, according to a lawsuit investors filed after they lost money. Coulther still peddled the venture to customers, some of whom dipped into retirement savings.

His alleged sin, marketing an investment his company hadn't authorized, is known as "selling away." It's the second most frequently cited reason for disciplining brokers and advisers, according to a 2007 American Bar Association task force report. In some cases, selling away involves rogue employees who hide side deals from managers. In others, the company simply fails to supervise workers properly.

"Selling away is obviously very serious," says Robert Fusfeld, a former U.S. Securities and Exchange Commission attorney who handled selling-away and other complaints while at the SEC.

Among large financial firms including Citigroup Inc.'s Citigroup Global Markets, Bank of America Corp.'s Merrill Lynch & Co., Morgan Stanley and UBS AG, only Ameriprise Financial Inc.'s Ameriprise Financial Services and brokerage unit Securities America Inc. have been disciplined for selling-away violations, unapproved private securities transactions or outside business activities, according to records of the Financial Industry Regulatory Authority, the securities industry watchdog.

FRANCHISE OPERATIONS

Among other large financial planning companies with extensive branch and independent franchise operations similar to Ameriprise, the Finra records turn up selling-away violations at only one firm.

For investors, the regulatory and legal issues are more than just a nuisance: They can weigh down a company's results with fines and compliance costs. Since Ameriprise's spinoff from American Express Co. in September 2005, its shares have fallen 35 percent to $24.14 on Jan. 5 compared with a 24 percent drop for the Standard & Poor's 500 Index.

"Regulators start asking questions about disclosures and suitability about anything that's an issue with customers," says Moody's Investors Service Inc. analyst Arthur Fliegelman. In a July report, he cited regulatory and compliance issues as among the challenges facing Ameriprise.

The company has put millions into new adviser surveillance systems since 2005. That spending is in addition to fines the company pays when regulators find wrongdoing. With Coulther, it took Ameriprise, known as American Express Financial Advisors before it was spun off, at least three months from the time he'd asked for permission in May 2006 until the firm vetoed the deal and then fired him, according to the complaint.

Coulther, who had raised $5.6 million for the investment while at Ameriprise, kept soliciting investors after he was dismissed, taking in more than $6 million while on his own, the complaint states.

"What Ameriprise should have done is said, 'This is an out-and-out fraud; we don't approve,' " says plaintiffs' attorney Neal Blaher of Orlando-based law firm Allen, Dyer, Doppelt, Milbrath & Gilchrist PA. Blaher, who represents the 98 investors named in the complaint, sued Ameriprise as well as Coulther, his supervisor and Regions Financial Corp.'s Regions Bank, which took over the bank that processed the investments.

Coulther would not comment. He says he's not represented by a lawyer in the suit and rejected Ameriprise's offer of legal help. Regions Financial spokesman Mel Campbell would not comment. Ameriprise spokesman Benjamin Pratt would not comment on the specifics of this case, as well as others in this article.

"We have nearly 12,000 advisers across the country," Pratt says. "A handful of cases does not indicate systemic problems."

Regulators say selling away persists among many firms that operate through one- or two-person offices without direct, on-site supervision. In cases that have occurred since Ameriprise was spun off in 2005, Ameriprise advisers in independent offices have been found guilty of stealing client funds and investing in phony real estate deals, among other transgressions.

"The selling away that occurs in remote branch offices usually isn't happening at Merrill Lynch or Smith Barney," says Fred Joseph, Colorado's securities commissioner and president of the North American Securities Administrators Association, the trade group for state securities regulators. "They don't let it happen."

CORPORATE PARENT

Ameriprise operates like the corporate parent of a McDonald's or Burger King restaurant. Almost 80 percent of its advisers, or 7,830 out of 9,797, are franchisees. Another 1,636 advisers and stockbrokers work in its Securities America brokerage. The parent, based in Minneapolis, provides its brand name, a menu of products and legal supervision of these otherwise independent advisers, salespeople and stockbrokers in 3,600 branch offices.

Ameriprise advisers keep as much as 91 percent of their commissions, according to the company's Web site, more than twice as much as at traditional Wall Street firms. In turn, the advisers pay overhead and a $290 monthly fee to Ameriprise.

"Selling away is the No. 1 problem," says Texas Securities Commissioner Denise Voigt Crawford, president-elect of the NASAA. "The people in charge of compliance are not located in branch offices," she says, speaking in general about securities firms, not just Ameriprise. "They're located at the main office. They're doing it long distance."

Cracking down on selling away isn't getting easier, says Joseph Borg, director of the Alabama Securities Commission. That's because independents are growing as advisers and brokers, along with their customers' assets, abandon dwindling Wall Street firms.

Ameriprise Chief Compliance Officer Kurt Lofgren says supervision has improved since he arrived in 2005. The company monitors advisers' e-mails for words such as guarantee that violate securities regulations against promising investment returns. It also flags transactions, so a supervisor can determine whether the investment is appropriate for customers.

"Given the size of our field force, I don't think it's unusual to have some of these cases," says Lofgren, 44, speaking of fraud and selling away. "When we find these, two things tend to happen: The adviser has a short remaining stay with this firm. And if there is wrongdoing, we make the client whole, even in cases where we think we have a valid basis of defense."

Ameriprise fired Shane Selewach in 2006. The Hyannis, Mass.-based adviser used clients' money to meet and date Russian women, according to a complaint by state regulators that year. From 2002 to 2006, Selewach took funds from mostly elderly customers, promising to invest in commodities and real estate.

Instead, he traveled to Russia and Ukraine after ringing up charges on Internet dating site Anastasia International, which describes itself as "the fastest way to meet thousands of Russian ladies," the complaint said.

Finra barred him from the securities industry in February 2008. His attorney didn't return calls or e-mails. Ameriprise, which was named in the state's action, had no comment. According to the Finra report, Ameriprise consented in March 2007 to an order with Massachusetts without admitting liability.

Ameriprise was required to pay $25,000 for the cost of the investigation, reimburse an undisclosed amount to Selewach's former clients and install at least one full-time person in the state to monitor compliance.

Ameriprise settled allegations made in October 2007 that it had failed to report 96 instances of forgeries of customer signatures by six financial advisers in Portsmouth, N.H. Ameriprise paid $3.8 million in fines and investor refunds after entering a consent order with New Hampshire's Bureau of Securities Regulation in April 2008.

Lofgren says the company now makes unannounced visits to look for evidence of unauthorized outside business activities and other signs of potential wrongdoing.