Ameriprise 2014 Annual Report Download - page 55

Legal, Regulatory and Tax Risks
Legal and regulatory actions are inherent in our businesses and could result in financial losses or harm our
businesses.
We are, and in the future may be, subject to legal and regulatory actions in the ordinary course of our operations, both
domestically and internationally. Actions brought against us may result in awards, settlements, penalties, injunctions or
other adverse results, including reputational damage. In addition, we may incur significant expenses in connection with our
defense against such actions regardless of their outcome. Various regulatory and governmental bodies have the authority
to review our products and business practices and those of our employees and independent financial advisors and to bring
regulatory or other legal actions against us if, in their view, our practices, or those of our employees or advisors, are
improper. Pending legal and regulatory actions include proceedings relating to aspects of our businesses and operations
that are specific to us and proceedings that are typical of the industries and businesses in which we operate. Some of
these proceedings have been brought on behalf of various alleged classes of complainants. In certain of these matters, the
plaintiffs are seeking large and/or indeterminate amounts, including punitive or exemplary damages. See Item 3 of this
Annual Report on Form 10-K — ‘‘Legal Proceedings.’’ In or as a result of turbulent times, the volume of claims and
amount of damages sought in litigation and regulatory proceedings generally increase.
Our businesses are regulated heavily, and changes to the laws and regulations applicable to our businesses may
have an adverse effect on our operations, reputation and financial condition.
Virtually all aspects of our business, including the activities of our parent company and our various subsidiaries, are subject
to various federal, state and international laws and regulations. For a discussion of the regulatory framework in which we
operate, see Item 1 of this Annual Report on Form 10-K — ‘‘Business — Regulation.’’ Compliance with these applicable
laws and regulations is time-consuming and personnel-intensive, and we have invested and will continue to invest
substantial resources to ensure compliance by our parent company and our subsidiaries, directors, officers, employees,
registered representatives and agents. Any enforcement actions, investigations or other proceedings brought against us or
our subsidiaries, directors, employees or advisors by our regulators may result in fines, injunctions or other disciplinary
actions that could harm our reputation or impact our results of operations. Further, any changes to the laws and
regulations applicable to our businesses, as well as changes to the interpretation and enforcement of such laws and
regulations, may affect our operations and financial condition. Such changes may impact our operations and profitability
and the practices of our advisors, including with respect to the scope of products and services provided, the manner in
which products and services are marketed and sold and the incurrence of additional costs of doing business. Ongoing
changes to regulation and oversight of the financial industry may produce results, the full impact of which cannot be
immediately ascertained. In addition, we expect the worldwide demographic trend of population aging will cause
policymakers to continue to focus on the framework of U.S. and non-U.S. retirement systems, which may drive additional
changes regarding the manner in which individuals plan for and fund their retirement, the extent of government
involvement in retirement savings and funding, the regulation of retirement products and services and the oversight of
industry participants. Any incremental requirements, costs and risks imposed on us in connection with such current or
future legislative or regulatory changes may constrain our ability to market our products and services to potential
customers, and could negatively impact our profitability and make it more difficult for us to pursue our growth strategy.
Certain examples of legislative and regulatory changes that may impact our businesses are described below.
Some of the changes resulting from rules and regulations called for under the Dodd-Frank Act could present operational
challenges and increase costs. For example, in the area of derivatives, higher margin and capital requirements, coupled
with more restrictive collateral rules, could impact our ability to effectively manage and hedge risk. Ultimately these
complexities and increased costs could have an impact on our ability to offer cost-effective and innovative insurance
products to our clients.
As a result of our deregistration as a savings and loan holding company, we are no longer subject to regulation, supervision
and examination as such by the Board of Governors for the FRB. However, the Dodd-Frank Act authorizes the Financial
Stability Oversight Committee (‘‘FSOC’’) to designate certain non-bank institutions as systemically important financial
institutions subject to regulation as such by the FRB. In the event we are so designated in the future, we would again be
subject to enhanced supervision and prudential standards, including requirements related to risk-based capital, leverage,
liquidity, credit exposure, stress-testing, resolution plans, early remediation, and certain risk management requirements.
Any such designation could cause us to alter our business practices or otherwise adversely impact our results of operation.
In September 2013, at the FSOC’s request, the OFR issued a report entitled ‘‘Asset Management and Financial Stability’’
discussing whether the asset-management industry of selected firms should be subject to enhanced prudential standards
and functional supervision. Although the report remains under significant scrutiny, the scope of the FSOC’s focus on the
asset management industry continues to evolve, and our asset management businesses are currently under the illustrative
assets under management thresholds mentioned in the report as possible triggers for increased supervision, potential
impacts on our asset management businesses could include additional reporting requirements, redemption restrictions,
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