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TIAA-CREF Individual & Institutional Services, LLC
Notes to Statement
of
Financial Condition
December 31, 2014
current market prices to satisfy the customer's obligation to the Clearing Broker. The maximum
amount
of
the Company's potential exposure to reimburse the Clearing Broker on margin accounts
may fluctuate daily depending
on
the amount
of
secured borrowings requested by customers, and
may not be readily estimated due to volatility
in
the amount
of
such borrowings. No amount is
accrued
in
these financial statements for potential reimbursements to the Clearing Broker
on
margin loans extended to the Company's customers. Services mitigates this risk by revalu
in
g
collateral at current prices, limiting portfolio concentration and by monitoring compliance with credit
limits and industry regulations.
The Company has established a liability for the anticipated costs
of
open regulatory actions
or
litigation. In
the
opinion
of
management, the ultimate disposition
of
such matters will not have a
material adverse impact
on
the Company's financial position, net capital,
or
results
of
operations.
9.
Re
lated Party Transactions
Services incurs expenses for administrative and distribution activities related to the issuance
of
variable annuity contracts by College Retirement Equities Fund
("
CREF") and for the distribution
activities
on
behalf
of
the TIAA Real Estate Account
("
REA"). Such activities performed by
Services are
at
cost, pursuant to a Principal Underwriting and Administrative Services Agreement
with CREF
and
a Distribution Agreement with REA. Fees are earned by Services based on a
percentage
of
CREF's and REA's daily net assets, adjusted to actual costs quarterly, based
on
actual amounts charged to Services by TIAA.
Services distributes shares
of
various affiliated mutual funds, tuition savings plans and insu
ra
nce
products
on
a retail basis under agreements with TPIS, TFI, T-C Life, and TIAA. Additionally,
Services distributes mutual funds to participants
of
TIAA and CREF as well as offers brokerage
services to customers that are cleared through Pershing LLC.
At
December
31
, 2014, due from
other affiliated entiti
es
includes $7,
131
,332 from CREF,
$1
,333,
031
from TPIS, $914,430 from TFI,
$1
,165,790 from T-C Life, and $346,809 from REA related to the distribution
of
insurance products
and mutual funds.
Virtually all cash disbursements for operating expenses incurred by Services are paid by TIAA,
which is reimbursed by Services in accordance with a Cash Disbursem
en
t and Reimbursement
Agreement with TIAA. TIAA allocates certain
of
its costs and expenses, as well as certain direct
costs, to Services.
In
accordance with the agreement between Services and TIAA, Services is not
obligated to pay TIAA for any expenses until and unless the associated revenue is received.
At
December
31
, 2014, $70,288,718 is due to TIAA related to such expenses.
Services has an agreement with TIAA-CREF Trust Company ("Trust Company") under which the
Trust Company provides advisory services on customer accounts and custodial services on certain
types
of
customer accounts for Services.
At
December
31
, 2014, the amount due to Trust
Company was $4,113,111.
6