Ameriprise 2014 Annual Report Download - page 60

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. The Company has
numerous pending matters which include information requests, exams or inquiries that the Company has received during
recent periods regarding certain matters, including: sales and distribution of mutual funds, annuities, equity and fixed
income securities, investment personnel’s potential access and use of material non-public information, 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, results of operations or liquidity.
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 paid excessive record-keeping fees, 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. On July 3, 2013, the
Company moved for summary judgment on statute of limitations grounds. On March 20, 2014, the Court filed its decision,
granting in part and denying in part the motion. On October 1, 2013, Plaintiffs filed their Motion to Certify Class Action,
and by order dated May 23, 2014, the Court granted Plaintiffs’ motion. The case is scheduled to begin trial on April 13,
2015. The Company cannot reasonably estimate the range of loss, if any, that may result from this matter due to the
procedural status of the case, the difficulty of predicting the likelihood of success on the merits of any of plaintiffs’ claims,
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
Western (now known as Retail Properties of America, Inc. (‘‘RPAI’’)) REIT. The action also names as defendants RPAI,
several of RPAI’s executives, and several members of RPAI’s board. The action alleges that the Company failed to perform
required due diligence and misrepresented various aspects of the REIT including fees charged to clients, risks associated
with the product, and valuation of the shares on client account statements. Plaintiffs seek unspecified damages. The
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