Ameriprise 2011 Annual Report Download - page 35

securities business. SEC regulations also impose notice requirements and capital limitations on the payment of dividends
by a broker-dealer to a parent.
Other agencies, exchanges and self-regulatory organizations of which certain of our broker-dealer subsidiaries are
members, and subject to applicable rules and regulations of, include the Commodities Futures Trading Commission
(‘‘CFTC’’), the National Futures Association and various stock exchanges. One of our broker-dealer subsidiaries is registered
with the CFTC and is thus subject to the requirements of the Commodity Exchange Act. AEIS is a member of the Boston
Stock Exchange and is a stockholder in the Chicago Stock Exchange. In addition, certain subsidiaries may also be
registered as investment advisers or insurance agencies and subject to the regulations described in the following sections.
Ameriprise Certificate Company, our face-amount certificate company, is regulated as an investment company under the
Investment Company Act. As a registered investment company, Ameriprise Certificate Company must observe certain
governance, disclosure, record-keeping, operational and marketing requirements. Investment companies are required by
the SEC to adopt and implement written policies and procedures designed to prevent violations of the federal securities
laws and to designate a chief compliance officer. Ameriprise Certificate Company pays dividends to the parent company
and is subject to capital requirements under applicable law and understandings with the SEC and the Minnesota
Department of Commerce.
Ameriprise India Insurance Brokers Services Private Limited (‘‘AIIBSPL’’), an Indian subsidiary, is licensed by India’s IRDA as
a direct insurance broker and is subject to regulation by the IRDA and the Indian Registrar of Companies. AIIBSPL is
subject to various ongoing internal control and compliance policies, capital requirements and statutory audit and reporting
obligations as a condition to maintaining its license. Further, AIIBSPL employees are required to receive training prior to
becoming licensed to provide insurance brokerage services.
Our financial advisors are subject to various regulations that impact how they operate their practices, including those
related to supervision, sales methods, trading practices, record-keeping and financial reporting. As a result of the
Dodd-Frank Act, our financial advisors may in the future become subject to a fiduciary standard of conduct in connection
with their broker-dealer activities that is no less stringent than what is currently applied to investment advisers under the
Investment Advisers Act of 1940 (‘‘Advisers Act’’). In January 2011, the SEC released a study recommending such a
uniform fiduciary standard of conduct for broker-dealers and investment advisers. In addition, because our independent
contractor advisor platform is structured as a franchise system, we are also subject to Federal Trade Commission and state
franchise requirements. Compliance with these and other regulatory requirements adds to the cost and complexity of
operating our business. We maintain franchise standards and requirements for our franchisees regardless of location. We
have made and expect to continue to make significant investments in our compliance processes, enhancing policies,
procedures and oversight to monitor our compliance with the numerous legal and regulatory requirements applicable to our
business.
Investment Adviser and Asset Management Regulation
In the U.S., certain of our subsidiaries are registered as investment advisers under the Advisers Act and subject to
regulation by the SEC. The Advisers Act imposes numerous obligations on registered investment advisers, including
fiduciary duties, disclosure obligations and record-keeping, and operational and marketing restrictions. Investment advisers
are required by the SEC to adopt and implement written policies and procedures designed to prevent violations of the
Advisers Act and to designate a chief compliance officer responsible for administering these policies and procedures. Our
registered investment advisers may also be subject to certain obligations of the Investment Company Act based on their
status as investment advisers to investment companies that we, or third parties, sponsor. The SEC is authorized to institute
proceedings and impose sanctions for violations of either the Advisers Act or the Investment Company Act, which may
include fines, censure or the suspension or termination of an investment adviser’s registration. As an outcome of the
Dodd-Frank Act, Congress is considering whether to modify the SEC’s investment adviser examination program by
authorizing one or more self-regulatory organizations to examine, subject to SEC oversight, SEC-registered investment
advisers.
Outside of the U.S., our Threadneedle group is authorized to conduct its financial services business in the United Kingdom
under the Financial Services and Markets Act 2000. Threadneedle is regulated by the Financial Services Authority (‘‘FSA’’),
which imposes certain capital, operational and compliance requirements. We expect that the FSA’s responsibilities for the
oversight of Threadneedle will be transitioned to the Financial Conduct Authority by the end of 2012. Threadneedle
companies and activities are also subject to local country regulations in Europe, Dubai, Hong Kong, Singapore, the U.S.
and Australia. Additionally, many of our subsidiaries are also subject to foreign, state and local laws with respect to
advisory services that are offered and provided by these subsidiaries, including services provided to government pension
plans. Foreign and state governments may also institute proceedings and impose sanctions for violations of their local
laws, which may include fines, censure or the suspension or termination of the right to do certain types of business in a
state.
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