CONCORD, N.H. (AP) – A subsidiary of American Express Co. has filed a complaint against New Hampshire’s secretary of state, saying it’s up to the federal government – not the state – to regulate its sales practices.

The complaint, filed last week in U.S. District Court, asks for an injunction against a state order that American Express Financial Advisers Inc., pay a $17.5 million penalty for fraudulent financial plans, plus restitution and $200,000 in investigative fees. The company is seeking to have the case moved to federal court.

“The issues raised in the matter are covered by federal securities laws and therefore we believe that federal court is the appropriate jurisdiction,” said David Kanihan, spokesman for American Express Financial Advisers.

The state Bureau of Securities Regulation said New Hampshire has a legal right to pursue the case.

“American Express is directly challenging the right of states to take enforcement action,” said Jeffrey Spill, the bureau’s lead attorney on the case. “They are testing congressional intent, which clearly reserves the state’s ability to take action on fraud and deceit against so-called federally covered advisers.”

New Hampshire’s Secretary of State issued the order on Feb. 17, the same day its securities regulation bureau filed a complaint in U.S. District Court, alleging the Minneapolis-based company illegally rewarded financial advisers who steered clients toward underperforming in-house mutual funds. New Hampshire regulators contend that American Express broke the law by putting its own financial interests ahead of its clients, mostly individual investors.

According to the complaint, American Express Financial Advisers did not adequately disclose to customers that advisers were being offered incentives, such as a one-year lease for a Mercedes Benz, for selling company funds.

The company has denied giving advisers extra compensation for selling certain funds.

AP-ES-04-20-05 1632EDT