Ameriprise 2013 Annual Report Download - page 186

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, the Financial Industry Regulatory Authority, the Office of the Comptroller of the
Currency, the UK Financial Conduct 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 and
distribution of mutual funds, annuities, equity and fixed income securities, real estate investment trusts, insurance
products, and financial advice offerings; supervision of the Company’s financial advisors; administration of insurance
claims; security of client information and front office systems and controls at the Company’s UK subsidiary. The Company
is also responding to regulatory audits, market conduct examinations and other state inquiries 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, it is inherently difficult to
determine whether any loss is probable or even possible, or to reasonably estimate the amount of any loss. The Company
cannot predict with certainty if, how or when any such proceedings will be initiated or resolved or what the eventual
settlement, fine, penalty or other relief, if any, may be, particularly for proceedings that are in their early stages of
development or where plaintiffs seek indeterminate damages. Numerous issues may need to be resolved, including through
potentially lengthy discovery and determination of important factual matters, and by addressing unsettled legal questions
relevant to the proceedings in question, before a loss or range of loss can be reasonably estimated for any proceeding. An
adverse outcome in one or more proceeding could eventually result in adverse judgments, settlements, fines, penalties or
other sanctions, 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.
In accordance with applicable accounting standards, the Company establishes an accrued liability for contingent litigation
and regulatory matters when those matters present loss contingencies that are both probable and can be reasonably
estimated. In such cases, there still may be an exposure to loss in excess of any amounts reasonably estimated and
accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability,
but continues to monitor, in conjunction with any outside counsel handling a matter, further developments that would make
such loss contingency both probable and reasonably estimable. Once the Company establishes an accrued liability with
respect to a loss contingency, the Company continues to monitor the matter for further developments that could affect the
amount of the accrued liability that has been previously established, and any appropriate adjustments are made each
quarter.
Certain legal and regulatory proceedings are described below.
In October 2011, a putative class action lawsuit entitled Roger Krueger, et al. vs. Ameriprise Financial, et al. was filed in
the United States District Court for the District of Minnesota against the Company, certain of its present or former
employees and directors, as well as certain fiduciary committees on behalf of participants and beneficiaries of the
Ameriprise Financial 401(k) Plan. The alleged class period is from October 1, 2005 to the present. The action alleges that
Ameriprise breached fiduciary duties under ERISA, by selecting and retaining primarily proprietary mutual funds with
allegedly poor performance histories, higher expenses relative to other investment options and improper fees paid to
Ameriprise Financial or its subsidiaries. The action also alleges that the Company breached fiduciary duties under ERISA
because it used its affiliate Ameriprise Trust Company as the Plan trustee and record-keeper and improperly reaped profits
from the sale of the record-keeping business to Wachovia Bank, N.A. Plaintiffs allege over $20 million in damages.
Plaintiffs filed an amended complaint on February 7, 2012. On April 11, 2012, the Company filed its motion to dismiss
the Amended Complaint, which was denied on November 20, 2012. The parties are engaged in discovery. On July 3,
2013, the Company moved for summary judgment on statute of limitations grounds. The hearing on the motion was heard
on August 14, 2013, and the parties are awaiting a decision by the Court. A hearing on class certification was held on
December 10, 2013, and the parties are awaiting a decision. The trial is currently scheduled for March 1, 2015. The
Company cannot reasonably estimate the range of loss, if any, that may result from this matter due to the early procedural
status of the case, the absence of class certification, the lack of a formal demand on the Company by the plaintiffs and
plaintiffs’ failure to allege any specific, evidence-based damages.
In October 2012, a putative class action lawsuit entitled Jeffers vs. Ameriprise Financial Services, et al. was filed against
the Company in the United States District Court for the Northern District of Illinois relating to its sales of the Inland
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