Ameriprise Financial Inc. will pay $1.25 million to settle an enforcement action brought by regulators over its sales of Section 529 college savings plans, the company said. Ameriprise neither admitted nor denied wrongdoing.

Brokerage regulator NASD said that the action against broker and insurer Ameriprise was its first in a probe into 529 sales practices at 20 securities firms. Other investigations are ongoing.

Section 529 plans -- named after the federal tax rules under which they were created -- were rolled out in 1997 and offer tax breaks for setting aside college savings. With more than 80 plans now marketed across the country, and assets in the accounts nearing $60 billion this year according to consulting firm Financial Resources Corp., NASD has been looking into possible abuses by plan brokers.

NASD said that it found that from May 2001 through the end of 2004, Ameriprise sold more than $1.1 billion of 529 plans to more than 138,000 customer accounts and did not adequately supervise those sales.Ameriprise, formerly American Express Financial Advisors, will pay a fine of $500,000 and an additional $750,000 to compensate customers.

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