Ameriprise 2015 Annual Report Download - page 186

applicable to business practices in the industries in which it operates. The Company can also be subject to litigation arising
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, FINRA, the OCC, 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, real estate investment trusts, insurance products, and financial
advice offerings; supervision of the Company’s financial advisors; administration of insurance and annuity claims; security
of client information; trading activity; 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.
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 November 2014, a lawsuit was filed against the Company’s London-based asset management affiliate in England’s High
Court of Justice Commercial Court, entitled Otkritie Capital International Ltd and JSC Otkritie Holding v. Threadneedle Asset
Management Ltd. and Threadneedle Management Services Ltd. (‘‘Threadneedle Defendants’’). Claimants allege that the
Threadneedle Defendants should be held liable for the wrongful acts of one of its former employees, who in February 2014
was held jointly and severally liable with several other parties for conspiracy and dishonest assistance in connection with a
fraud perpetrated against Claimants in 2011. Claimants allege they were harmed by that fraud in the amount of
$120 million. The Threadneedle Defendants applied to the Court for an Order dismissing the proceedings as an abuse of
process of the Court. This application was declined in August 2015. The Threadneedle Defendants applied to the Court of
Appeal for leave to appeal, which application was granted in November 2015. A hearing on the appeal is expected in
January 2017 and the case is stayed pending the outcome of the appeal. 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 number of parties
involved, and the failure to allege any specific, evidence based damages.
24. Related Party Transactions
The Company may engage in transactions in the ordinary course of business with significant shareholders or their
subsidiaries, between the Company and its directors and officers or with other companies whose directors or officers may
also serve as directors or officers for the Company or its subsidiaries. The Company carries out these transactions on
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