Ameriprise 2010 Annual Report Download - page 46

from manufacturers that have agreed to provide us marketing, sales and account maintenance support. For example,
conflicts may arise between our position as a provider of financial planning services and as a manufacturer and/or
distributor or broker of asset accumulation, income or insurance products that one of our affiliated financial advisors may
recommend to a financial planning client. We have procedures and controls that are designed to identify, address and
appropriately disclose conflicts of interest. However, identifying and appropriately dealing with conflicts of interest is
complex, and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with conflicts of interest.
In addition, the SEC and other federal and state regulators have increased their scrutiny of potential conflicts of interest. It
is possible that potential or perceived conflicts could give rise to litigation or enforcement actions. It is possible also that
the regulatory scrutiny of, and litigation in connection with, conflicts of interest will make our clients less willing to enter
into transactions in which such a conflict may occur, and will adversely affect our businesses.
Misconduct by our employees and affiliated financial advisors is difficult to detect and deter and could harm our
business, results of operations or financial condition.
Misconduct by our employees and affiliated financial advisors could result in violations of law, regulatory sanctions and/or
serious reputational or financial harm. Misconduct can occur in each of our businesses and could include:
• binding us to transactions that exceed authorized limits;
• hiding unauthorized or unsuccessful activities resulting in unknown and unmanaged risks or losses;
• improperly using, disclosing or otherwise compromising confidential information;
• recommending transactions that are not suitable;
• engaging in fraudulent or otherwise improper activity;
• engaging in unauthorized or excessive trading to the detriment of customers; or
• otherwise not complying with laws, regulations or our control procedures.
We cannot always deter misconduct by our employees and affiliated financial advisors, and the precautions we take to
prevent and detect this activity may not be effective in all cases. Preventing and detecting misconduct among our branded
franchisee advisors and our unbranded affiliated financial advisors who are not employees of our company and tend to be
located in small, decentralized offices, present additional challenges. We also cannot assure that misconduct by our
employees and affiliated financial advisors will not lead to a material adverse effect on our business, results of operations
or financial condition.
Legal and regulatory actions are inherent in our businesses and could result in financial losses or harm our
businesses.
We are, and in the future may be, subject to legal and regulatory actions in the ordinary course of our operations, both
domestically and internationally. Various regulatory and governmental bodies have the authority to review our products and
business practices and those of our employees and independent financial advisors and to bring regulatory or other legal
actions against us if, in their view, our practices, or those of our employees or affiliated financial advisors, are improper.
Pending legal and regulatory actions include proceedings relating to aspects of our businesses and operations that are
specific to us and proceedings that are typical of the industries and businesses in which we operate. Some of these
proceedings have been brought on behalf of various alleged classes of complainants. In certain of these matters, the
plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. See Item 3 of this
Annual Report on Form 10-K—‘‘Legal Proceedings.’’ In or as a result of turbulent times such as those we have
experienced, the volume of claims and amount of damages sought in litigation and regulatory proceedings generally
increase. Substantial legal liability in current or future legal or regulatory actions could have a material adverse financial
effect or cause significant reputational harm, which in turn could seriously harm our business prospects.
A downgrade or a potential downgrade in our financial strength or credit ratings could adversely affect our financial
condition and results of operations.
Financial strength ratings, which various ratings organizations publish as a measure of an insurance company’s ability to
meet contractholder and policyholder obligations, are important to maintain public confidence in our products, the ability to
market our products and our competitive position. A downgrade in our financial strength ratings, or the announced
potential for a downgrade, could have a significant adverse effect on our financial condition and results of operations in
many ways, including:
• reducing new sales of insurance products, annuities and investment products;
• adversely affecting our relationships with our affiliated financial advisors and third-party distributors of our products;
• materially increasing the number or amount of policy surrenders and withdrawals by contractholders and policyholders;
• requiring us to reduce prices for many of our products and services to remain competitive; and
• adversely affecting our ability to obtain reinsurance or obtain reasonable pricing on reinsurance.
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