Ameriprise 2014 Annual Report Download - page 39

Broker-Dealer and Securities Regulation
Certain of our subsidiaries are registered with the SEC as broker-dealers under the Securities Exchange Act of 1934
(‘‘Exchange Act’’) and with certain states, the District of Columbia and other U.S. territories. Our broker-dealer subsidiaries
are also members of self-regulatory organizations, including the Financial Industry Regulatory Authority (‘‘FINRA’’), and are
subject to the regulations of these organizations. The SEC and FINRA have stringent rules with respect to the net capital
requirements and the marketing and trading activities of broker-dealers. Our broker-dealer subsidiaries, as well as our
financial advisors and other personnel, must obtain all required state and FINRA licenses and registrations to engage in the
securities business and take certain steps to maintain such registrations in good standing. 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 (‘‘NFA’’) and various stock exchanges. AFSI 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 (Banking Division).
In connection with the cessation of financial planning and distribution services in India, Ameriprise India Insurance Brokers
Services Private Limited (‘‘AIIBSPL’’) has received conditional approval from India’s Insurance Regulatory and Development
Authority (‘‘IRDA’’) to surrender its license as a direct insurance broker. It remains subject to regulation by the Indian
Registrar of Companies, although we intend to take steps to dissolve AIIBSPL. In addition, Ameriprise India Private Limited
(‘‘AIPL’’) surrendered its investment adviser registration certificate from the Securities and Exchange Board of India
(‘‘SEBI’’) and is no longer regulated by the SEBI.
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’’). Ameriprise Financial and our financial advisors service clients who hold
assets in IRAs and employer-sponsored retirement plan accounts. ERISA and related provisions of the Internal Revenue
Code impose duties on persons who are fiduciaries under ERISA, and prohibit certain transactions involving the assets of
IRA and ERISA plan clients and certain transactions by the fiduciaries to the plans and IRAs. The Department of Labor
continues to pursue regulations that would significantly expand the scope of who is considered an ERISA fiduciary and
what activity constitutes acting as an ERISA fiduciary, while prohibiting certain additional types of transactions conducted by
persons who are considered fiduciaries.
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
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