NEW YORK – American Express Co. (AXP) will pay New Jersey $5 million and make reforms after it failed to supervise financial advisers who overcharged some customers, state Attorney General Peter Harvey said Wednesday.
Following an investigation, Arthur Davidson of Cherry Hill, N.J., a financial adviser in the Voorhees, N.J., office of American Express Financial Advisors (search), pleaded guilty Monday to a charge of theft by deception brought by the state attorney general, Harvey said in a statement.
The credit card and travel services company agreed to hire an indepensaid the company was pleased to put the matter behind it and added that it first discovered Davidson's misconduct and told New Jersey authorities.
AEFA has paid full restitution to Davidson's victims and agreed to compensate any additional victims who are found. It also will pay a civil penalty of $5 million.
According to the state attorney general, the victims include an apartment manager in her mid-60s, earning $44,000 a year with about $25,000 in assets, who paid $7,000 for four financial plans in a single year.
The settlement was reached in cooperation with American Express Financial Advisors, a unit of the company that is set to be spun off in the third quarter.
It came aftelving American Express Financial Advisors' failure to supervise financial advisers within its franchise offices.
Under the terms of his guilty plea, Davidson faces a three-year prison sentence and will surrender his broker's license.