Ameriprise 2011 Annual Report Download - page 175

through the date of this report and, as circumstances warranted from time to time, injected capital into one or more of the
2a-7 Funds. The Company has not provided a formal capital support agreement or net asset value guarantee to any of the
2a-7 Funds.
Contingencies
The Company and its subsidiaries are involved in the normal course of business in legal, regulatory and arbitration
proceedings, including class actions, concerning matters arising in connection with the conduct of its activities as a
diversified financial services firm. These include proceedings specific to the Company as well as proceedings generally
applicable to business practices in the industries in which it operates. The Company can also be subject to litigation arising
out of its general business activities, such as its investments, contracts, leases and employment relationships. Uncertain
economic conditions, heightened and sustained volatility in the financial markets and significant financial reform legislation
may increase the likelihood that clients and other persons or regulators may present or threaten legal claims or that
regulators increase the scope or frequency of examinations of the Company or the financial services industry generally.
As with other financial services firms, the level of regulatory activity and inquiry concerning the Company’s businesses
remains elevated. From time to time, the Company receives requests for information from, and/or has been subject to
examination or claims by, the SEC, FINRA, the Federal Reserve Bank, the OCC, the Financial Services Authority, state
insurance and securities regulators, state attorneys general and various other domestic or foreign governmental and quasi-
governmental authorities on behalf of themselves or clients concerning the Company’s business activities and practices,
and the practices of the Company’s financial advisors. During recent periods, the Company has received information
requests, exams or inquiries regarding certain matters, including: sales of, or disclosures pertaining to, mutual funds,
annuities, equity and fixed income securities, low priced securities, insurance products, brokerage services, financial advice
offerings; trading practices within the Company’s asset management business; supervision of the Company’s financial
advisors; company procedures and information security. The Company is also responding to regulatory audits, market
conduct examinations and other inquiries (including inquiries from the states of Minnesota and New York) relating to an
industry-wide investigation of unclaimed property and escheatment practices and procedures. The number of reviews and
investigations has increased in recent years with regard to many firms in the financial services industry, including
Ameriprise Financial. The Company has cooperated and will continue to cooperate with the applicable regulators regarding
their inquiries.
These legal and regulatory proceedings and disputes are subject to uncertainties and, as such, the Company is unable to
predict the ultimate resolution or range of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief, in addition to further claims, examinations
or adverse publicity that could have a material adverse effect on the Company’s consolidated financial condition or results
of operations.
Certain legal and regulatory proceedings are described below.
In June 2004, an action captioned John E. Gallus et al. v. American Express Financial Corp. and American Express
Financial Advisors Inc., was filed in the United States District Court for the District of Arizona, and was later transferred to
the United States District Court for the District of Minnesota. The plaintiffs alleged that they were investors in several of the
Company’s mutual funds and they purported to bring the action derivatively on behalf of those funds under the Investment
Company Act of 1940 (the ‘40 Act). The plaintiffs alleged that fees allegedly paid to the defendants by the funds for
investment advisory and administrative services were excessive. Plaintiffs seek an order declaring that defendants have
violated the ‘40 Act and awarding unspecified damages including excessive fees allegedly paid plus interest and other
costs. On July 6, 2007, the district court granted the Company’s motion for summary judgment, dismissing all claims with
prejudice. Plaintiffs appealed the district court’s decision, and on April 8, 2009, the U.S. Court of Appeals for the Eighth
Circuit reversed the district court’s decision, and remanded the case for further proceedings. The Company filed with the
United States Supreme Court a Petition for Writ of Certiorari to review the judgment of the Court of Appeals in this case in
light of the Supreme Court’s anticipated review of a similar excessive fee case captioned Jones v. Harris Associates. On
March 30, 2010, the Supreme Court issued its ruling in Jones v. Harris Associates, and on April 5, 2010, the Supreme
Court vacated the Eighth Circuit’s decision in this case and remanded it to the Eighth Circuit for further consideration in
light of the Supreme Court’s decision in Jones v. Harris Associates. Without any further briefing or argument, on June 4,
2010, the Eighth Circuit remanded the case to the district court for further consideration in light of the Supreme Court’s
decision in Jones v. Harris Associates. On December 8, 2010, the district court re-entered its July 2007 order granting
summary judgment in favor of the Company. Plaintiffs filed a notice of appeal with the Eighth Circuit on January 10, 2011.
The Eighth Circuit Court heard oral arguments of the parties on November 17, 2011. The Company is awaiting the Court’s
ruling.
In November 2010, the Company’s J. & W. Seligman & Co. Incorporated subsidiary (‘‘Seligman’’) received a governmental
inquiry regarding an industry insider trading investigation, as previously stated by the Company in general media reporting.
The Company continues to cooperate fully with that inquiry. Neither the Company nor Seligman has been accused of any
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