Ameriprise 2013 Annual Report Download - page 37

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 (Banking Division).
Certain of our Indian subsidiaries are subject to applicable regulations in connection with our financial planning and
distribution services in India. Ameriprise India Insurance Brokers Services Private Limited (‘‘AIIBSPL’’) is licensed by India’s
Insurance Regulatory and Development Authority (‘‘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. In
addition, the Securities and Exchange Board of India has granted an investment adviser registration certificate to AIPL that
allows it to offer comprehensive financial planning solutions and other investment advisory 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 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 increase the frequency of examinations of SEC-registered investment
advisers, including the authorization of one or more self-regulatory organizations to examine, subject to SEC oversight,
SEC-registered investment advisers.
In connection with rules adopted by the CFTC, certain of our subsidiaries are registered with the CFTC as a commodity
trading advisor and commodity pool operator and are also members of the NFA, a self-regulatory body under CFTC
jurisdiction. These rules adopted by the CFTC eliminated or limited previously available exemptions and exclusions from
many CFTC requirements and impose additional registration and reporting requirements for operators of certain registered
investment companies and certain other pooled vehicles that use or trade in futures, swaps and other derivatives that are
subject to CFTC regulation. Additional regulations continue to be under consideration by the CFTC including those that will
impact the manner by which we place and settle trades for clients. The CFTC or the NFA may institute proceedings and
impose sanctions for violations of the Commodity Exchange Act and applicable rules relating to commodities and
commodity-related instruments (including stock index futures); sanctions may include fines, censure or the suspension or
termination of registration or NFA membership.
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 currently regulated by the Financial Conduct Authority
(‘‘FCA’’) and the Prudential Regulation Authority (‘‘PRA’’), which assumed regulatory responsibilities from the Financial
Services Authority (‘‘FSA’’) during 2013. FCA and PRA rules impose certain capital, operational and compliance
requirements and allow for disciplinary action in the event of noncompliance. Additionally, in connection with its recent
retail distribution review, the FSA adopted new rules that govern the manner in which retail clients pay for investment
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