You are on page 1of 15

Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 1 of 15

IN THE UNITED STATES DISTRICT COURT


FOR THE EASTERN DISTRICT OF PENNSYLVANIA

MICHAEL C. LOSCALSO,

PLAINTIFF,

v.

AMERIPRISE FINANCIAL, INC., CIVIL ACTION NO.____________

DEFENDANT,

AND

AMERIPRISE FINANCIAL
SERVICES, INC.

DEFENDANT.

COMPLAINT AND JURY DEMAND

Plaintiff Michael Loscalso by and through his attorneys, Bell & Bell, LLP, hereby

files the following Complaint and Jury Demand (“Complaint”).

PRELIMINARY STATEMENT

1. This is an action for an award of damages, liquidated damages, attorneys’ fees

and other relief on behalf of Plaintiff Michael Loscalso, a former employee of

Ameriprise Financial, Inc. (“Ameriprise”) and its subsidiary, Ameriprise

Financial Services, Inc. (“AFS”). Mr. Loscalso has been harmed by

Defendants’ discriminatory and retaliatory conduct, Defendants’ wrongful

termination of his employment and by Defendants’ breach of Mr. Loscalso’s

employment contract. This action arises under Section 806 of the Corporate
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 2 of 15

and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-

Oxley Act of 2002 and the Common Law.

JURISDICTIONAL STATEMENT

2. This Court has original jurisdiction over all civil actions arising under the

Constitution, laws, or treaties of the United States pursuant to 28 U.S.C. §§

1331 and 1391.

3. The jurisdiction of this Court is also invoked pursuant to 28 U.S.C. § 1343(4),

which grants the District Court original jurisdiction in any civil action

authorized by law to be commenced by any person to recover damages to

secure equitable or other relief under any act of Congress providing for the

protection of civil rights.

4. This Court has supplemental jurisdiction over any state law claims pursuant to

28 U.S.C. § 1367.

5. All conditions precedent to the institution of this suit have been fulfilled.

Plaintiff filed a Sarbanes-Oxley Complaint with the Occupational Safety and

Health Administration of the United States Department of Labor, on February

2, 2010. Pursuant to 29 C.F.R. § 1980.114(a), on August 6, 2010, Plaintiff

notified the Office of Administrative Law Judges of his intent to file a

Complaint for de novo review with the United States District Court for the

Eastern District of Pennsylvania, as 180 days lapsed since the filing of his

Complaint with the Department of Labor without a final decision being issued.

This action has been filed within 60 days of the Office of Administrative Law

Judges’ Order holding the matter in abeyance.

2
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 3 of 15

VENUE

6. This action properly lies in the Eastern District of Pennsylvania, pursuant to 29

U.S.C. § 1391(b) because the claim arose in this judicial district.

PARTIES

7. Plaintiff Michael Loscalso is a citizen and resident of Delanco, New Jersey and

the United States of America.

8. Defendant Ameriprise was and is a corporation duly organized and existing

under state law that acted as Mr. Loscalso’s employer.

9. Defendant AFS was and is a subsidiary company of Ameriprise which also

acted as Mr. Loscalso’s employer.

10. Defendant Ameriprise is a publicly traded company and is required to file

reports with the Securities and Exchange Commission.

11. AFS is a subsidiary of Ameriprise that provides financial services to clients,

and is subject to SEC rules, regulations and reporting requirements.

12. Defendant Ameriprise’s principal offices are located at 55 Ameriprise

Financial Center, Minneapolis, MN 55474.

13. At all relevant times, employees of Ameriprise and AFS acted as agents and

servants for Ameriprise and/or AFS.

14. At all relevant times, employees of Ameriprise and AFS were acting within the

scope of their authority and in the course of employment under the direct

control of Ameriprise and/or AFS.

3
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 4 of 15

15. Mr. Loscalso is an “employee” as defined in Title 29, Code of Federal

Regulations Part 1980.101 and is thus protected by the provisions of the

Sarbanes-Oxley Act.

16. Defendants Ameriprise and AFS are “companies” as defined in Title 29, Code

of Federal Regulations Part 1980.101 and they are thus subject to the

provisions of the Sarbanes-Oxley Act.

17. Although Ameriprise and AFS labeled Mr. Loscalso as an “independent

contractor,” the position that Mr. Loscalso held with Defendants involved

significant control over Mr. Loscalso’s work, including his rate of pay and his

day-to-day activities such that Mr. Loscalso was an employee of Defendants.

18. Mr. Loscalso also qualifies for protection under the Sarbanes-Oxley Act as an

employee because he was an individual whose employment could be affected

by a company or company representative.

FACTS

19. Mr. Loscalso began his career with Defendants in 1989.

20. Most recently, Mr. Loscalso served as a Registered Principal/OSJ

Branch Manager.

21. In his position with Defendants, Mr. Loscalso earned $260,000 per year

and supervised more than 50 financial advisors and 60 licensed and

unlicensed staff.

22. The terms and conditions of Mr. Loscalso’s employment were set out

and governed by his Franchise Agreement. Attached hereto as Exhibit

A.

4
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 5 of 15

23. As set forth in detail below, Mr. Loscalso’s repeated complaints about

fraud, forgery and other practices which violated SEC rules and

regulations led to the retaliatory termination of his employment by

Defendants.

24. Mr. Loscalso engaged in the protected activity of reporting violations of

Securities and Exchange Commission rules and regulations to management on

numerous occasions throughout his employment and immediately prior to his

termination by Defendants.

25. Specifically, during the time that Mr. Loscalso served as a Registered

Principal, he repeatedly reported violations of SEC regulations to his superiors,

including incidents relating to forgery, fraud, unlicensed sales, unlicensed

signing (signature affixation), overcharging for financial planning services,

underdelivery of financial planning advice, and breaches of client privacy and

data security.

26. Instead of appropriately addressing the reports of wrongdoing that Mr.

Loscalso brought to their attention, Defendants’ executives ignored Mr.

Loscalso’s complaints and delayed taking appropriate steps to address the

violations reported.

27. On several occasions, Defendants chose to protect successful financial

advisors and the significant revenue they generated, rather than meaningfully

disciplining those financial advisors who failed to follow the rules.

28. In one situation that Mr. Loscalso reported, an advisor’s assistant signed 30

annuity applications on the advisor’s behalf. Defendants’ response to this was

5
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 6 of 15

to issue a mere letter of caution to the advisor, despite the severity of the

violation.

29. Defendants also failed to advise their clients of the improprieties and deprived

them of the opportunity to rescind the fraudulent transactions or recover the

inappropriate fees they had paid.

30. Despite Defendants’ refusal to appropriately address Mr. Loscalso’s

complaints, throughout 2009, Mr. Loscalso continued to report various

incidents of misconduct and other compliance concerns to management. For

example:

a. In April 2009, Mr. Loscalso reported to management that Financial

Advisor Andre Duffie was allowing his unlicensed assistant Denise Curry

to transact client business by processing and completing trades using Mr.

Duffie’s identification number.

b. Ameriprise failed to take appropriate action to address this complaint.

31. In the Fall of 2009, Mr. Loscalso made several escalating complaints of

violations of SEC rules and regulations and requests for documentation

regarding compliance issues, which ultimately resulted in Mr. Loscalso’s

termination. For example:

a. In September 2009, Mr. Loscalso brought serious concerns he had

regarding client privacy and data security issues to the attention of

management, who again ignored his complaints.

b. Mr. Loscalso was also involved in reporting an advisor who was involved

in fraud and comingling of funds during this time period.

6
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 7 of 15

32. In October 2009, Mr. Loscalso complained to Ameriprise management that he

was frustrated with the lack of response to his current and prior compliance

complaints.

33. In an October 15, 2009 email to Special Investigations Group Investigator

Michael Meixner, Mr. Loscalso references both the lack of response he

received regarding his privacy/data security concerns and the fact that earlier

that month Mr. Loscalso had alerted Mr. Meixner to Ameriprise’s history of

failing to respond to or address compliance related complaints made by Mr.

Loscalso.

34. As Mr. Loscalso documented in his October 15, 2009 email, “When you

recently visited my office we talked at length about my continued escalation of

OSJ issues (through the years), and the difficulties I’ve had in the past getting

the support or leadership I needed with those issues.”

35. During the Fall of 2009, Mr. Loscalso was interviewed by Ameriprise’s

Special Investigations Group in connection with allegations that two of the

advisors under Mr. Loscalso’s supervision had engaged in insider trading.

36. During a series of interviews, Mr. Loscalso was asked for various details

regarding his relationship and communications with these advisors.

37. In an effort ensure that he had all of the relevant documentation relating to

these questions and his communications with these advisors, Mr. Loscalso

requested access to his archived emails.

7
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 8 of 15

38. After several weeks of Mr. Loscalso’s repeated attempts to secure these emails

from various individuals, Mr. Loscalso was told that he could not be granted

access to the emails because they had been “purged.”

39. Mr. Loscalso then directed his inquiry to several high level members of

management, including Kurt Lofgren, Lon Jury, Thomas Nicolosi and

Catherine Sweet.

40. In an email dated October 23, 2009, Mr. Loscalso specifically stated that the

emails that he was seeking contained documentation concerning misconduct,

stating, “The archived documentation would include topics such as forgery,

unlicensed sales, unlicensed transaction execution,

undelivered/underdelivered/late delivery of financial planning advice,

settlement in the field, password sharing, consequence management, advisor

training/templates, issue escalation, etc., all of which will serve to support the

ongoing supervision and communication I’ve provided over the years as an

RP.”

41. Between the end of September 2009 and October 2009, Mr. Loscalso orally

advised several members of management that he was considering alerting

outside regulatory agencies, including FINRA and the SEC, about his concerns

regarding violations of SEC rules and regulations.

a. Specifically, during one telephone conversation, Mr. Loscalso advised

Thomas Nicolosi and Lon Jury of his intent to make these outside

complaints.

8
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 9 of 15

b. Mr. Loscalso advised Mr. Meixner of this during his meeting with Mr.

Meixner referenced above.

c. In addition, Mr. Loscalso advised John Murphy of Ameriprise compliance

of his intention to report Defendants to outside regulatory agencies during

a separate telephone conference.

42. Mr. Loscalso’s October 23, 2009 email also references the possibility that Mr.

Loscalso might pursue his concerns regarding Ameriprise’s compliance

concerns by reporting these concerns to external regulatory agencies.

a. Specifically, Mr. Loscalso states that he believes that he should have

access to his emails and notes that “I would think that electronic

communication such as Lotus Notes would be something that would be

‘discoverable’ should there be a Regulatory inquiry and therefore be

available and archived for a much longer period of time.”

43. When Mr. Loscalso’s request was still not granted, on November 3, 2009, Mr.

Loscalso forwarded his October 23, 2009 email to General Counsel John Junek

and others seeking assistance with his request for his emails.

44. On November 5, 2009, just two days after Mr. Loscalso’s November 3, 2009

email to Ameriprise’s General Counsel, Mr. Loscalso was terminated from his

employment with Defendants.

45. In a letter relating to his termination from Franchise Field Vice President Lon

Jury, Mr. Jury claims that Mr. Loscalso was terminated for cause as a result of

a failure to supervise his financial advisors.

9
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 10 of 15

46. In fact, Mr. Loscalso appropriately and consistently supervised the financial

advisors in his group.

47. Mr. Jury’s characterization of Mr. Loscalso’s supervision is inaccurate in

many respects.

48. Moreover, many of the alleged deficiencies cited in Mr. Jury’s letter are

clearly pretextual, as these standards are not enforced against other Registered

Principals.

49. Contrary to Ameriprise’s proffered reason for Mr. Loscalso’s termination, Mr.

Loscalso was terminated in retaliation for the escalating complaints he made to

management relating to violations of SEC rules and regulations.

50. As set forth above, Mr. Loscalso repeatedly attempted to fulfill his

responsibilities by reporting significant incidents involving violations of

SEC rules and regulations to management.

51. Ameriprise failed to adequately investigate or address these reports and

instead retaliated against Mr. Loscalso by terminating his employment.

52. Defendants Ameriprise and AFS have violated Section 806 of the Corporate

and Criminal Fraud Accountability Act of 2002, Title VIII of the Sarbanes-

Oxley Act of 2002, by terminating Plaintiff in retaliation for his complaints

related to violations of SEC rules and regulations.

53. Defendants Ameriprise and AFS have wrongfully terminated Plaintiff for his

refusal to engage in what he believed to be illegal activity.

54. Defendants Ameriprise and AFS have wrongfully terminated Plaintiff in

violation of a recognized public policy.

10
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 11 of 15

55. Defendants Ameriprise and AFS breached their contract with Plaintiff by

terminating him without cause before the end of the term of his contract.

56. Defendants Ameriprise and AFS breached their contract with Plaintiff by

terminating him without cause and without providing him with an opportunity

to cure within one year as provided for in the contract.

57. Defendants Ameriprise and AFS breached their contract with Plaintiff by

terminating his employment without cause and without providing him with an

opportunity to cure within thirty days as provided for in the contract.

58. Mr. Loscalso has suffered mental anguish and emotional distress as a

proximate result of the actions and inactions of Defendants.

59. Mr. Loscalso suffered, and continues to suffer severe emotional distress as a

proximate result of the actions and inactions of Defendants.

60. Mr. Loscalso has suffered financial losses as a proximate result of the actions

and inactions of Defendants.

COUNT I
(Section 806 of the Corporate and Criminal Fraud Accountability Act of 2002, Title
VIII of the Sarbanes-Oxley Act of 2002)
Plaintiff v. All Defendants

61. Plaintiff Michael Loscalso repeats and incorporates by reference the

allegations of all previous paragraphs as fully as though the same were set

forth at length herein.

62. As set forth in detail above, Plaintiff Michael Loscalso was discriminated

against in violation of Section 806 of the Corporate and Criminal Fraud

Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 2002.

11
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 12 of 15

63. In terminating Plaintiff Michael Loscalso from his employment because of his

complaints and threats to report Defendants to regulatory agencies and other

authorities, Defendants violated Section 806 of the Corporate and Criminal

Fraud Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of

2002.

64. As the direct result of the aforesaid unlawful employment practices engaged in

by Defendants, Plaintiff Michael Loscalso has sustained a loss of earnings, loss

of future earning power, as well as back pay, front pay, and interest due

thereon. Mr. Loscalso has also incurred an obligation for attorneys’ fees and

costs of suit.

COUNT II
(Wrongful Termination)
Plaintiff v. All Defendants

65. Plaintiff Michael Loscalso repeats and incorporates by reference the

allegations of all previous paragraphs as fully as though the same were set

forth at length herein.

66. Defendants terminated Mr. Loscalso as a result of Mr. Loscalso’s refusal to

engage in illegal activity.

67. Defendants terminated Mr. Loscalso in violation of a recognized public policy

because they terminated him for attempting to report fraud and other

wrongdoing under SEC rules.

68. Defendants terminated Mr. Loscalso in violation of public policy because they

terminated him for refusing to engage in what Mr. Loscalso believed to be

illegal activity.

12
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 13 of 15

69. The above described conduct of Defendants constituted wrongful termination

of Plaintiff.

70. As the direct result of the aforesaid unlawful employment practices engaged in by

Defendants, Plaintiff Michael Loscalso has sustained a loss of earnings, severe

emotional and psychological distress, loss of self-esteem, loss of future earning

power, as well as back pay, front pay, and interest due thereon.

COUNT III
(Breach of Contract)
Plaintiff v. All Defendants

71. Plaintiff Michael Loscalso repeats and incorporates by reference the

allegations of all previous paragraphs as fully as though the same were set

forth at length herein.

72. The terms and conditions of Plaintiff’s employment with Defendants were set

out in Plaintiff’s Franchise Agreement as set forth above.

73. Defendants breached the terms and conditions of said Agreements.

74. As the direct and proximate result of Defendants’ breach of contract, Plaintiff

Michael Loscalso has sustained financial damages and interest due thereon.

PRAYER FOR RELIEF

75. Plaintiff Michael Loscalso repeats and incorporates by reference the

allegations of all previous paragraphs as fully as though the same were set

forth at length herein.

WHEREFORE, Plaintiff Michael Loscalso respectfully requests that this Court enter

judgment in his favor and against Defendants and Order:

a. Appropriate equitable relief, including reinstatement or front pay;

13
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 14 of 15

b. Defendants compensate Plaintiff Michael Loscalso with a rate of pay and

other benefits and emoluments of employment to which he would have

been entitled had he not been subjected to unlawful discrimination and

retaliation;

c. Defendants compensate Plaintiff Michael Loscalso with the wages and

other benefits and emoluments of employment lost because of their

unlawful conduct;

d. Defendants pay Plaintiff Michael Loscalso liquidated damages;

e. Defendants pay Plaintiff Michael Loscalso compensatory damages for

future pecuniary losses, pain and suffering, inconvenience, mental

anguish, loss of employment and other nonpecuniary losses as allowable;

f. Defendants pay Plaintiff Michael Loscalso punitive damages;

g. Defendants pay Michael Loscalso’s attorneys’ fees; and

h. Such other relief as is deemed just and proper or which is available under

the relevant laws.

14
Case 2:10-cv-05347-NS Document 1 Filed 10/08/10 Page 15 of 15

JURY DEMAND

Plaintiff Michael Loscalso hereby demands trial by jury as to all issues so triable.

___________________________
Jennifer C. Bell, Esquire
PA Attorney I.D. No. 81045
James A. Bell IV, Esquire
PA Attorney I.D. No. 81724
Bell & Bell LLP
1617 JFK Blvd. – Suite 1020
Philadelphia, PA 19103
(215) 569-2500

Attorneys for Plaintiff Michael Loscalso

DATE: October 8, 2010

15