What changed in this filing

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Item 1A. Risk Factors

2023-02-15 compared with 2022-02-24 · 132 added, 97 removed, 205 unchanged (53% of the section changed)

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For any period in which revenues decline, net income and operating margins will likely decline by a greater proportion because certain expenses will be fixed over that finite period and may not decrease in proportion to the decrease in revenues.

A majority of our revenues are based on contracts with the U.S.

mutual funds that are subject to termination without cause and on short notice.

We provide investment advisory, distribution, and other administrative services to the U.S.

mutual funds under various agreements.

A majority of our revenues are based on contracts with collective investment funds that are subject to termination without cause and on short notice.

We provide investment advisory, distribution, and other administrative services to collective investment funds under various agreements.

Investment advisory services are provided to each T.

Rowe Price mutual fund under individual investment management agreements.

The Board of each T.

Rowe Price mutual fund must annually approve the terms of the investment management and service agreements and can terminate the agreement upon 60-days' notice.

Rowe Price mutual fund seeks to lower the fees that we receive or terminate its contract with us, we would experience a decline in fees earned from the U.S.

mutual funds, which could have a material adverse effect on our revenues and net income.

Rowe Price collective investment fund under individual investment management agreements, which can be terminated on short notice.

In addition the Board of each T.

Rowe Price U.S.

mutual fund must annually approve the terms of the investment management and service agreements.

Rowe Price collective investment fund seeks to lower the fees that we receive or terminate its contract with us, we would experience a decline in fees earned from the collective investment funds, which could have a material adverse effect on our revenues and net income.

We operate in an intensely competitive industry.

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While we believe there will always be demand for strong performing active management, we cannot predict how much market share these competitors will gain.

Furthermore, many aspects of the asset management industry are seeing increased regulatory activity and scrutiny, in particular related to ESG practices and related matters, transparency and unbundling of fees, inducements, conflicts of interest, risk management, cybersecurity, technology, diversity, equity and inclusion, and compensation.

We may respond to these regulatory matters or may be impacted by these actions in a manner different from our competitors, which may impact our AUM or result in the loss of clients and their assets.

As part of our continued efforts to attract and retain clients, we develop and launch new products and services, which may require expenditure of resources and may expose us to new regulatory or compliance requirements as well as increased risk of operational or client service errors.

In the event that we decide to reduce the fees we charge for investment advisory services in response to competitive pressures, which we have done selectively in the past, revenues and operating margins could be

adversely impacted.

Fee reductions may vary depending on strategy and product offerings, which could result in investment rebalancing or reallocation adversely impacting revenues and operating margins.

The failure or negative performance of products offered by competitors may cause our products, which are similar, to be impacted irrespective of our performance.

Many competitors offer similar products to those offered by us, and the failure or negative performance of competitors’ products could lead to a loss of confidence in similar products we offer, irrespective of the performance of such products.

Any loss of confidence in a product type could lead to withdrawals, redemptions and liquidity issues in such products, which may cause our AUM, revenue and earnings to decline.

Our operations are complex and a failure to properly execute operational processes could have an adverse effect on our reputation and decrease our revenues.

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In certain cases, we rely on third-party service providers for the execution and delivery of these services.

There can be no assurance that these vendors will properly perform these processes or that there will not be interruptions in services from these third parties.

There can be no assurance that these service providers will properly perform these processes or that there will not be interruptions in services from these third parties.

Failure to properly execute or oversee these services could have an adverse impact on our business, financial results and reputation, and subject us to regulatory sanctions, fines, penalties, or litigation.

New investment strategies, investment vehicles, distribution channels, or other evolutions of or additions to our business may increase the risk that our existing systems may not be adequate to control the risks introduced by such changes.

Significant business changes may require us to update our processes or technology and may increase risk to meeting our business objectives.

In addition, our information systems and technology platforms might not be able to accommodate our continued growth, and the cost of maintaining such systems might increase from its current level.

New investment strategies, investment vehicles, distribution channels, advancement in technology and digital wealth and distribution tools or other evolutions of or additions to our business may increase the risk that our existing systems may not be adequate to control the risks introduced by such changes.

Business changes may require us to update our processes or technology and may increase risk to meeting our business objectives.

In addition, our information systems and technology platforms might not be able to accommodate our business operations, and the cost of maintaining such systems might increase from its current level.

If any of these factors were to arise it could disrupt our operations, increase our expenses or result in financial exposure, regulatory inquiry or reputational damage.

Our business model is dependent on our personnel, as well as others involved in our business, such as third-party vendors, providers and other intermediaries, who support internal controls, supervision, technology and training to provide comfort that our activities do not violate applicable guidelines, rules and regulations or adversely affect our clients, counterparties or us, and all of which are subject to potential human errors.

Our personnel and others involved in our business may make errors that are not always immediately detected, which may disrupt our operations, cause losses, lead to regulatory fines or sanctions, litigation, or otherwise damage our reputation.

Our business model is dependent on our personnel, who as part of their roles support internal controls, supervision, technology and training to provide comfort that our activities do not violate applicable guidelines, rules and regulations or adversely affect our clients, counterparties or us.

We also rely on the personnel of others involved in our business, such as third-party service providers, intermediaries or other vendors.

Our personnel and the personnel of others involved in our business may make errors or engage in fraudulent or malicious activities, that are not always immediately detected, which may disrupt our operations, cause losses, lead to regulatory fines or sanctions, litigation, or otherwise damage our reputation.

The quantitative models we use may contain errors, which could result in financial losses or adversely impact product performance and client relationships.

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We have spent many years developing our reputation for integrity, strong investment performance, and superior client service.

Our brand is a valuable intangible asset, but it is vulnerable to a variety of threats that can be difficult or impossible to control, and costly or even impossible to remediate.

Our brand is a valuable intangible asset, but it is vulnerable to a variety of threats that can be difficult or impossible to control, and costly or even impossible to remediate, if damaged.

Regulatory inquiries and rumors can tarnish or substantially damage our reputation, even if those inquiries are satisfactorily addressed.

Actual or perceived failure to adequately address the environmental, social, and governance ("ESG") expectations of our various stakeholders could lead to a tarnished reputation and loss of client assets or harm our access to capital.

Furthermore, ESG issues have been the subject of increased focus by regulators and any inability to meet applicable requirements or expectations may adversely impact our reputation.

Actual or perceived failure to adequately address the environmental, social, and governance ("ESG") expectations, or failure to manage conflicts of interests, of our various stakeholders could lead to a tarnished reputation and loss of client assets or harm our access to capital.

Furthermore, ESG issues have been the subject of increased focus by regulators and stakeholders.

Any inability to meet applicable requirements or expectations may adversely impact our reputation.

Additionally, various stakeholders have divergent views on ESG matters, including in the countries in which we operate and invest, as well as states and localities where we serve public sector clients.

These differences increase the risk that any action or lack thereof by us concerning ESG will be perceived negatively by some stakeholders and could adversely impact our reputation and business.

Our global presence and investments on behalf of our clients around the world could also lead to heightened scrutiny and criticism in an increasingly fragmented geopolitical landscape.

Misconduct by our employees or third-party service providers could likewise adversely impact our reputation and lead to a loss of client assets.

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Real or perceived conflicts between our clients’ interests and our own, as well as any fraudulent activity or other exposure of client assets or information, may impair our reputation and subject us to litigation or regulatory action.

Any damage to our brand could impede our ability to attract and retain clients and key personnel, and reduce the amount of assets under our management, any of which could have a material adverse effect on our revenues and net income.

Any damage to our brand

could impede our ability to attract and retain clients and key personnel, and reduce the amount of assets under our management, any of which could have a material adverse effect on our revenues and net income.

Failure to comply with client contractual requirements and/or investment guidelines could result in costs of correction, damage awards or regulatory fines and penalties against us and loss of revenues due to client terminations.

Many of the agreements under which we manage assets or provide products or services specify investment guidelines or requirements, such as adherence to investment restrictions or limits, that we are required to observe in the provision of our services.

Laws and regulations impose similar requirements for certain investment products.

A failure to comply with these guidelines or requirements could result in damage to our reputation or in our clients seeking to recover losses, withdrawing their assets or terminating their contracts.

Regulators likewise may commence enforcement actions for violations of such requirements, which could lead to fines and penalties against us.

Any such effects could cause our revenues and profitability to decline.

We maintain various compliance procedures and other controls to seek to prevent, detect and correct such errors.

Significant errors for which we are responsible could impact our reputation, results of operations, financial condition or liquidity.

Our expenses are subject to significant fluctuations that could materially decrease net income.

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• expenses and capital costs incurred to maintain and enhance our administrative and operating services infrastructure, such as technology assets, depreciation, amortization, and research and development;

• changes in the costs incurred for third-party vendors that perform certain administrative and operating services;

• changes in the costs incurred for third-party service providers that perform certain administrative and operating services;

• changes in expenses that are correlated to our assets under management, such as distribution and servicing fees;

• a future impairment of investments that is recognized in our consolidated balance sheet;

• a future impairment of goodwill that is recognized in our consolidated balance sheet;

• a future impairment of goodwill or other intangible assets that is recognized in our consolidated balance sheet;

• unanticipated material fluctuations in foreign currency exchange rates applicable to the costs of our operations abroad;

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• future changes to legal and regulatory requirements and potential litigation;

• disruptions of third-party services such as communications, power, and mutual fund transfer agent, investment management, trading, and accounting systems.

• disruptions of third-party services such as communications, power, cloud services, transfer agent, investment management, trading, and accounting systems.

Under our agreements with the U.S.

mutual funds, we charge the funds certain administrative fees and related expenses based upon contracted terms.

If we fail to accurately estimate our underlying expense levels or are required to incur expenses relating to the mutual funds that are not otherwise paid by the funds, our operating results will be adversely affected.

While we are under no obligation to provide financial support to any T.

Rowe Price investment products, any financial support provided would reduce capital available for other purposes and may have an adverse effect on revenues and net income .

If we fail to accurately estimate our underlying expense levels or are required to incur expenses relating to the U.S.

mutual funds that are not otherwise paid by the funds, our operating results will be adversely affected.

While we are under no obligation to provide financial support to any sponsored investment products, any financial support provided would reduce capital available for other purposes and may have an adverse effect on revenues and net income .

Our hedging strategies utilized to mitigate risk may not be effective, which could impact our earnings.

We employ hedging strategies related to our supplemental savings plan in order to hedge the liability related thereto.

We employ hedging strategies related to our supplemental savings plan in order to hedge the liability related to the plan.

In the event that our hedging strategies are not effective, the resulting impact may adversely affect our results of operations, cash flows or financial condition.

Amendments to tax laws may impact the marketability of the products and services we offer our clients or the financial position of the Company.

Amendments to tax laws may impact the marketability of the products and services we offer our clients or our financial position.

We are subject to income taxes as well as non-income-based taxes, in both the United States and various foreign jurisdictions.

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Further, their recommendations can change over time and we could lose their recommendation and their clients' assets under our management.

Increasing competition for these distribution and sales channels as well as regulatory changes and initiatives may cause our distribution costs to rise, could cause further cost increases in the future, or could otherwise negatively impact the distribution of our products.

Mergers, acquisitions, and other ownership or management changes could also adversely impact our relationships with these third-party intermediaries.

As a result of these changes, more of our revenues may be concentrated with fewer intermediaries, which may impact our dependence on these intermediaries.

A failure to maintain our third-party distribution and sales channels, or a failure to maintain strong business relationships with our distributors and other intermediaries, may impair our distribution and sales operations.

Any inability to access and successfully sell our products to clients through such third-party channels could have a negative effect on our level of AUM and adversely impact our business.

Moreover, we can provide no assurance that we will continue to have access to the third-party financial intermediaries that currently distribute our products, or that we will continue to have the opportunity to offer all or some of our existing products through them.

The presence of any of the adverse conditions discussed above would reduce revenues and net income, possibly by material amounts.

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• incapacitating or inflicting losses of lives among our employees;

• interrupting our business operations or those of critical service providers,

• triggering technology delays or failures, and

• interrupting our business operations or those of critical service providers or other providers;

• triggering technology delays or failures;

• requiring substantial capital expenditures and operating expenses to remediate damage, replace our facilities, and restore our operations.

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We have developed various backup systems and contingency plans, but we cannot be assured that those preparations will be adequate in all circumstances that could arise, or that material interruptions and disruptions will not occur.

We also rely to varying degrees on outside vendors for service delivery in addition to technology and disaster contingency support, and we cannot be assured that these vendors will be able to perform in an adequate and timely manner.

We also rely to varying degrees on outside service providers for service delivery in addition to technology and disaster contingency support, and we cannot be assured that these service providers will be able to perform in an adequate and timely manner.

If we lose the availability of any associates, or, if we are unable to respond adequately to such an event in a timely manner, we may be unable to timely resume our business operations, which could lead to financial losses, a tarnished reputation and loss of clients that could result in a decrease in assets under management, lower revenues, and materially reduced net income.

Our business, financial condition, and results of operation may be adversely affected by the coronavirus or other global pandemics.

Since early 2020, global financial markets have been monitoring and reacting to the novel coronavirus pandemic.

The spread of the coronavirus has created significant volatility, uncertainty and economic disruption to the global economy and may further impact our business, financial condition and results of operations.

Over the last several years, the global financial markets have been monitoring and reacting to the novel coronavirus pandemic.

Global pandemics create significant volatility, uncertainty and economic disruption to the global economy and may further impact our business, financial condition and results of operations.

The coronavirus pandemic has adversely affected global financial markets and impacted global supply chains.

Health concerns and uncertainty regarding continued coronavirus impacts could lead to further and/or increased volatility in global capital and credit markets, adversely affect our key executives and other personnel, clients, investors, providers, suppliers, lessees, and other third parties, and negatively impact our assets under management ("AUM"), revenues, income, business and operations.

Health concerns and uncertainty regarding continued coronavirus impacts could lead to further and/or increased volatility in global capital and credit markets, adversely affect our key executives and other personnel, clients, investors, service providers and other vendors, suppliers, lessees, and other third parties, and negatively impact our assets under management ("AUM"), revenues, income, business and operations.

Since our revenue is based on the market value and composition of the assets under our management, the ultimate impact on global financial markets and our clients’ decisions related to this event could adversely affect our revenue and operating results.

Furthermore, while we have in place robust and well-established business continuity plans that address the potential impact to our associates and our facilities, and a comprehensive suite of technologies which enable our associates to work remotely and conduct business, and to date while we have been successful in navigating these challenges, no assurance can be given that the steps we have taken will continue to be effective or appropriate.

Furthermore, while we have in place robust and well-established plans for operational resiliency and business continuity that address the potential impact to our associates and our facilities, and a comprehensive suite of technologies which enable our associates to work remotely and conduct business, and to date while we have been successful in navigating these challenges, no assurance can be given that the steps we have taken will continue to be effective or appropriate.

Additionally, we must effectively ensure a safe working environment for associates working onsite in our offices, and adequately manage the post-pandemic transition from remote to onsite or a hybrid working environment.

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All of these investments are subject to investment market risk, and our non-operating investment income could be adversely affected by the realization of losses upon the disposition of our investments or the recognition of significant impairments or unrealized losses on these investments.

In addition, related investment income has fluctuated significantly over the years depending upon the performance of our corporate investments, including the impact of market conditions and interest rates, and the size of our corporate money market and longer-term mutual fund holdings.

Fluctuations in other investment income are expected to occur in the future.

The soundness of other financial services institutions could adversely affect us or the client portfolios we manage.

Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships.

We, and the client portfolios that we manage, have exposure to many different counterparties, and routinely execute transactions with counterparties in the financial services industry.

Many of these transactions expose us or such client portfolios to credit risk in the event of default of its counterparty.

While we regularly conduct assessments of such risk posed by counterparties, the risk of non-performance by such parties is subject to sudden swings in the financial and credit markets.

Such non-performance could produce a financial loss for us or the portfolios we manage.

We may review and pursue strategic transactions in order to maintain or enhance our competitive position and these could pose risks.

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Important ongoing integration-related risks, including that the anticipated benefits of the transaction may not be fully realized, or may take longer to realize than expected, or that the integration may cost more or take longer than expected, could adversely impact our operating results.

The ongoing integration of OHA is a time-consuming process that could distract our management and disrupt our business.

A significant portion of OHA's revenue is derived from performance fees on investment advisory agreements and carried interest from general partner interests in affiliated private investment funds.

Generally, OHA is entitled to a performance fee and carried interest under these agreements only in cases where the related

portfolio investment return exceeds agreed-upon relative or absolute investment return thresholds, and there can be no assurance that these thresholds will be met.

Furthermore, a significant portion of OHA's revenue is derived from performance fees on investment advisory agreements and carried interest from general partner interests in affiliated private investment funds.

Generally, OHA is entitled to a performance fee and carried interest under these agreements only in cases where the related portfolio investment return exceeds agreed-upon relative or absolute investment return thresholds, and there can be no assurance that these thresholds will be met.

Climate change-related risks could adversely affect our business, products, operations and clients, which may cause our AUM, revenue and earnings to decline.

Our business and those of our clients could be impacted by climate change-related risks.

Climate change may present risk to our business through changes in the physical climate or from the process of transitioning to a lower-carbon economy.

Climate-related physical risks arise from the direct impacts of a changing climate in the short- and long-term.

Such risks may include the risks of extreme weather events and changes in temperature, which may damage infrastructure and facilities, as well as disrupt connectivity or supply chains.

Climate-related transition risks arise from exposure to the transition to a lower-carbon economy through policy, regulatory, technology and market

For instance, new regulations or guidance relating to climate change, as well as the perspectives of stakeholders regarding climate change, may impact our business and reputation, which could increase costs on our business.

Climate-related physical and transition risks could impact us both directly and indirectly through adverse impacts to our clients, including as a result of declines in asset values, changes in client preferences, increased regulatory and compliance costs and significant business disruptions.

Any of these risks may cause our AUM, revenue and earnings to decline.

We are exposed to risks arising from our international operations.

We operate in a number of jurisdictions outside of the United States.

Our international operations require us to comply with the legal and regulatory requirements of various foreign jurisdictions and expose us to the political consequences of operating in foreign jurisdictions.

Our international operations require us to comply with the legal and regulatory requirements of various foreign jurisdictions and expose us to political environments and risks that can compare less favorably than those in the United States.

Our foreign business operations are also subject to the following risks:

• difficulty in managing, operating, and marketing our international operations;

• the inability to transact in various investments or to repatriate the proceeds from our investments from countries outside the U.S.;

• the potential nationalization of our property or that of the companies in our investment portfolios;

• fluctuations in currency exchange rates which may result in substantial negative effects on assets under our management, revenues, expenses, and assets in our U.S.

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Our success depends on our key personnel and our investment performance and financial results could be negatively affected by the loss of their services.

Our success depends on our highly skilled personnel, including our portfolio managers, investment analysts, sales and client relationship personnel, and corporate officers, many of whom have specialized expertise and extensive experience in our industry.

Strong financial services professionals are in demand, and we face significant competition for highly qualified employees.

Generally, our associates can terminate their employment with us at any time.

Our success depends on our highly skilled personnel, including our portfolio managers, investment analysts, sales and client relationship personnel, technology and operations professionals, and corporate officers, many of whom have specialized expertise and extensive experience in our industry.

Professionals with financial services experience across functional areas are in demand, and we face significant competition for highly qualified employees.

Generally, our associates can terminate their employment with us at any time, with most required to provide little to no notice.

Recently we have adopted more significant notification requirements for certain key positions.

As a result of these new requirements, some employees may be less willing to continue their employment with us or join our firm.

We cannot assure that we will be able to attract or retain key personnel.

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However, in order to retain or replace our key personnel, we may be required to increase compensation, which would decrease net income.

The loss of key personnel could damage our reputation and make it more difficult to retain and attract new employees and investors.

The loss of key personnel could damage our reputation and make it more difficult to attract and retain employees and investors.

Losses of assets from our client investors would decrease our revenues and net income, possibly materially.

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Compliance within a complex regulatory environment imposes significant financial and strategic costs on our business, and non-compliance could result in fines and penalties.

If we are unable to maintain compliance with applicable laws and regulations, we could be subject to criminal and civil liability, the suspension of our employees, fines, penalties, sanctions, injunctive relief, exclusion from certain markets, or temporary or permanent loss of licenses or registrations necessary to conduct our business.

There is uncertainty associated with the regulatory and compliance environments in which we operate.

Our business is subject to extensive and complex, overlapping and/or conflicting, and frequently changing rules, regulations, policies and legal interpretations, around the world.

Additionally, over the past several years the pace and scope of new rules, regulations, policies and legal interpretations has increased both in the U.S.

and globally, which requires additional resources and expense in order to digest and institute process to comply.

If we are unable to maintain compliance with applicable laws and regulations, we could be subject to criminal and civil liability, the

suspension of our employees, fines, penalties, sanctions, injunctive relief, exclusion from certain markets, or temporary or permanent loss of licenses or registrations necessary to conduct our business.

A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanctions, could consume substantial expenditures of time and capital.

Any regulatory investigation and any failure to maintain compliance with applicable laws and regulations could severely damage our reputation, adversely affect our ability to conduct business and decrease revenue and net income, and potentially result in complex litigation.

Legal and regulatory developments in the mutual fund and investment advisory industry could increase our regulatory burden, impose significant financial and strategic costs on our business, and cause a loss of, or impact the servicing of, our clients and fund shareholders.

Our regulatory environment is frequently altered by new regulations and by revisions to, and evolving interpretations of, existing regulations.

New regulations present areas of uncertainty susceptible to alternative interpretations;

Legal and regulatory developments in the mutual fund, retirement and investment advisory industry could increase our regulatory burden, impose significant financial and strategic costs on our business, and cause a loss of, or impact the servicing of, our clients and fund shareholders.

Our regulatory environment is frequently altered by new laws and regulations and by revisions to, and evolving interpretations of, existing regulations.

New laws and regulations present areas of uncertainty susceptible to alternative interpretations;

regulators and prospective litigants may not agree with reasoned interpretations we adopt.

Future changes could require us to modify or curtail our investment offerings and business operations or impact our expenses and

profitability.

Additionally, some regulations may not directly apply to our business but may impact the capital markets, service providers or have other indirect effects on our ability to provide services to our clients.

Future changes could require us to modify or curtail our investment offerings and business operations or impact our expenses and profitability.

Additionally, some laws and regulations may not directly apply to our business but may impact the capital markets, service providers or have other indirect effects on our ability to provide services to our clients.

Potential impacts of current or proposed legal or regulatory requirements include, without limitation, the following:

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Actions taken by applicable regulatory or legislative bodies may impact our business activities and increase our costs.

• The Federal Reserve Board has adopted final regulations related to non-bank Systemically Important Financial Institutions ("SIFIs"), and other jurisdictions are contemplating similar regulation.

At this time, US regulators have not designated mutual funds or traditional asset managers as non-bank SIFIs.

However, if any T.

Rowe Price fund or T.

Rowe Price affiliate was deemed a SIFI, increased regulatory oversight would apply to our business, which may include enhanced capital, liquidity, leverage, stress testing, resolution planning, and risk management requirements.

• The Commodity Futures Trading Commission ("CFTC") regulation may limit the ability of certain T.

Rowe Price investment products to use futures, swaps, and other derivatives.

• The Commodity Futures Trading Commission ("CFTC") regulation may limit the ability of certain sponsored investment products to use futures, swaps, and other derivatives.

We have registered certain subsidiaries with the CFTC, subjecting us to additional regulatory requirements and costs, but also providing us additional flexibility to utilize such products.

Nonetheless, there are still certain limitations on our investment products due to CFTC rules.

• There has been increased global regulatory focus on the manner in which intermediaries are paid for distribution of mutual funds.

Changes to long-standing market practices related to fees or enhanced disclosure requirements may negatively impact sales of mutual funds by intermediaries, especially if such requirements are not applied to other investment products.

• We remain subject to various state, federal and international laws and regulations related to data privacy and protection of data we maintain concerning our clients and employees.

These requirements continue to evolve, most commonly in ways that increase the complexity and costs of compliance.

For example, California enacted the California Consumer Privacy Act of 2018 (the "CCPA") effective in January 1, 2020, which, among other things, significantly increased compliance obligations and the potential penalties for non-compliance, and California voters in November 2020 approved a replacement of this law effective January 1, 2023 with a new law that expands various requirements.

• There has been increased global regulatory focus on the manner in which intermediaries are paid for distribution of mutual funds or other collective investments funds.

Changes to long-standing market practices related to fees or enhanced disclosure requirements may negatively impact sales of mutual funds or other collective investments funds by intermediaries, especially if such requirements are not applied to other investment products.

• We remain subject to various state, federal and international laws and regulations (and associated judicial decisions) related to data collection and use;

privacy and data protection;

cybersecurity;

current and emerging technology;

data storage, localization, retention and destruction;

data disclosure, transfer, availability, and integrity;

notification of regulators and/or impacted parties regarding adverse data-related events;

and other similar matters that can concern the data of our clients and employees.

Requirements in these areas continue to expand and evolve throughout the globe, most commonly in ways that increase the complexity and costs of compliance.

For example, in addition to the EU's GDPR data protection rules, we also are or may become subject to or affected by additional country, federal and state laws, regulations and guidance impacting consumer privacy, such as the California Consumer Privacy Act ("CCPA") (and new provisions becoming effective January 1, 2023 under the California Privacy Rights Act) that provides for enhanced consumer protections for California residents, enforcement authority by the California Attorney General and/or the California Privacy Protection Agency for violations, and the potential for private litigation, including statutory damages for data security breaches.

Each of these types laws and regulations could impose significant limitations, require changes to our business, or restrict our collection, use or storage of personal data, which may increase our compliance expenses and make our business more costly or less efficient to conduct.

• After the 2008 financial crisis, global regulations on over-the-counter derivatives spearheaded by The Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States and European Market Infrastructure Regulation in the European Union ("EU") have imposed clearing, margin, trade reporting, electronic trading and recordkeeping requirements on market participants.

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Compliance with MiFID II has increased operational complexity and increased our costs.

For example, we began to pay for third-party

investment research used by our UK-based investment manager, T.

For example, we began to pay for third-party investment research used by our UK-based investment manager, T.

Rowe Price International Ltd, in 2018, and we now pay for all the research needs of our investment professionals globally.

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Furthermore, the SEC and other regulators in the U.S.

have announced plans to pursue similar initiatives, including additional disclosure obligations that would apply to our business operations, our employee and board diversity and other ESG-related matters.

have proposed rules to pursue similar initiatives, including additional disclosure obligations that would apply to our business operations, our employee and board diversity and other ESG-related matters.

We cannot predict the nature of future changes to the legal and regulatory requirements applicable to our business, nor the extent of the impacts that will result from current or future proposals.

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They may also result in changes to our product or service offerings.

The changing regulatory landscape may also impact a number of our service providers and, to the extent such providers alter their services or increase their fees, it may impact our expenses or those of the products we offer.

The changing regulatory landscape may also impact a number of service providers that provide services to us and, to the extent such service providers alter their services or increase their fees, it may impact our expenses or those of the products we offer.

We may become involved in legal and regulatory proceedings that may not be covered by insurance.

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Certain of our subsidiaries are subject to net capital requirements imposed by various federal, state, and foreign authorities.

Each of our subsidiaries’ net capital meets or exceeds all current minimum requirements;

however, a significant change in the required net capital, an operating loss, or an extraordinary charge against net capital could adversely affect the ability of our subsidiaries to expand or maintain their operations if we were unable to make additional investments in them.

United Kingdom exit from European Union.

We have a significant locally authorized and regulated presence in the United Kingdom (“UK”) to support our global investment management business.

We have realigned our European Union ("EU") and UK operations in response to the UK exit (“Brexit”) from the EU;

however, we cannot predict the ultimate impact of Brexit on our operations or our business.

We remain committed to our clients, associates and business expansion across the region.

Any significant change in the required net capital, an operating loss, or an extraordinary charge against net capital could adversely affect the ability of our subsidiaries to expand or maintain their operations if we were unable to make additional investments in them, which could impact our earnings.

TECHNOLOGY RISKS.

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• regulatory compliance and reporting.

All of our technology systems, including those provided by vendors, are vulnerable to disability or failures due to cyberattacks, natural disasters, power failures, acts of war or terrorism, sabotage, coding errors and other causes.

All of our technology systems, including those provided by service providers, are vulnerable to disability or failures due to cyberattacks, natural disasters, power failures, acts of war or terrorism, sabotage, coding errors, and other causes.

A suspension or termination of vendor-provided software licenses or related support, upgrades, and maintenance could cause system delays or interruption.

Although we have robust business and disaster recovery plans, if our technology systems, including those provided by vendors, were to fail and we were unable to recover in a timely way, we would be unable to fulfill critical business functions, which could lead to a loss of clients and could harm our reputation.

A technological breakdown or disruption in services from a vendor could also interfere with our ability to comply with financial reporting and other regulatory requirements, exposing us to disciplinary action and liability to our clients.

Although we have robust business and disaster recovery plans, if our technology systems, including those provided by service providers, were to fail and we were unable to recover in a timely way, we would be unable to fulfill critical business functions, which could lead to a loss of clients and could harm our reputation.

A technological breakdown or disruption in services from a service provider could also interfere with our ability to comply with financial reporting and other regulatory requirements, exposing us to disciplinary action and liability to our clients.

In addition, our continued success depends on our ability to effectively integrate operations across many systems and/or countries, and to adopt new or adapt existing technologies to meet client, industry, and regulatory demands.

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We are dependent on the effectiveness of the information and cybersecurity policies, procedures and capabilities we maintain to protect our systems and data.

An externally caused information security incident, such as a cyberattack, a phishing scam, virus, ransomware attack, denial-of-service attack, or an attack launched from within the Company could materially interrupt business operations or cause disclosure or modification of confidential client or competitive information.

In addition, our third-party vendors and other intermediaries with which we conduct business and transmit data could be subject to a successful cyberattack or other information security event, and we cannot ensure that such third parties have all appropriate controls in place to protect the confidentiality of information in the custody of those third parties or to allow them to continue their business operations, including their services to us, in a timely manner.

An externally caused data security incident, such as a cyberattack, a phishing scam, virus, ransomware attack, denial-of-service attack, or an attack launched from within our systems could materially interrupt business operations or cause disclosure or modification of confidential client or competitive information.

In addition, our third-party service providers and other intermediaries with which we conduct business and transmit data could be subject to a successful cyberattack or other data security event, and we cannot ensure that such third parties have all appropriate controls in place to protect the confidentiality of data in the custody of those third parties or to allow them to continue their business operations, including their services to us, in a timely manner.

There have been increasing numbers of publicized cybersecurity incidents in recent years impacting other financial services firms as well as firms in other industries.

Our use of third-party vendors and cloud technologies could heighten this risk.

Should the technology operations on which we rely be compromised, we may have to make significant investments to upgrade, repair or replace our technology infrastructure or third-party vendors and may not be able to make such investments on a timely basis.

Our use of third-party service providers and cloud technologies could heighten this risk.

Should the technology operations on which we rely be compromised, we may have to make significant investments to upgrade, repair or replace our technology infrastructure or third-party service providers and may not be able to make such investments on a timely basis.

Although we maintain insurance coverage that we believe is reasonable, prudent and adequate for the purpose of our business, it may be insufficient to protect us against all losses and costs stemming from breaches of security, cyberattacks and other types of unlawful activity, or any resulting disruptions from such events.

We could be subject to losses if we fail to properly safeguard and maintain confidential information.

As part of our normal operations, we maintain and transmit confidential information about our clients, associates and other parties, as well as, proprietary information relating to our business operations.

We could be subject to losses if we fail to properly safeguard and maintain confidential data.

As part of our normal operations, we maintain and transmit confidential data about our clients, associates and other parties, as well as, proprietary data relating to our business operations.

We maintain a system of internal controls designed to provide reasonable assurance that both inadvertent errors and fraudulent activity, including misappropriation of assets, fraudulent financial reporting, and unauthorized access to sensitive or confidential data, is either prevented or detected in a timely manner.

We also leverage cloud-based solutions for the transmission and storage of this information.

Our systems, or those of third-party service providers we may use to maintain and transmit such information, could be victimized by unauthorized users or corrupted by computer viruses or other malicious software code.

Additionally, authorized persons could inadvertently or intentionally release or alter confidential or proprietary information.

We also leverage cloud-based solutions for the transmission and storage of this data.

Our systems, or those of third-party service providers we may use to maintain and transmit such data, could be victimized by unauthorized users or corrupted by computer viruses or other malicious software code.

Additionally, authorized persons could inadvertently or intentionally release or alter confidential or proprietary data.

Such disclosure could, among other things:

• seriously damage our reputation,

• allow competitors access to our proprietary business information,

• result in a loss of confidence in our business and products,

• allow competitors access to our proprietary business data,

• subject us to liability for a failure to safeguard data of clients, associates, and other parties,

• result in the termination of contracts by our existing clients,

• subject us to regulatory action and potential litigation, and

• require significant capital and operating expenditures to investigate and remediate the breach.

• subject us to regulatory investigations, actions or fines, and potential litigation involving regulators, stockholders, or other members of the public, and

• require significant capital and operating expenditures to investigate and remediate the breach, and organizational costs to mitigate against future incidents.

Furthermore, if any person, including any of our associates, negligently disregards or intentionally overrides or circumvents our established controls with respect to confidential data, or otherwise mismanages or misappropriates that data, we could be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution in one or more jurisdictions.

We are subject to numerous laws and regulations designed to protect this information, such as U.S.

federal and state laws and foreign laws and regulations governing the protection of personal or confidential data, such as the EU’s General Data Protection Regulation.

G overnmental authorities throughout the U.S.

and around the world have enacted or are considering similar types of legislative and regulatory proposals concerning data protection.

Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the collection, use, dissemination and security of data.

Each of these privacy, security, and data protection laws and regulations could impose significant limitations, require changes to our business, or restrict our use or storage of personal information, which may increase our compliance expenses and make our business more costly or less efficient to conduct.

As noted above, we are subject to numerous laws and regulations designed to protect confidential data, such as U.S.

federal and state laws and foreign laws and regulations governing the privacy and protection of personal or other confidential data, such as the EU’s General Data Protection Regulation and similar types of laws enacted in several U.S.

states and other jurisdictions in Asia.

Any failure to properly safeguard and maintain confidential data creates risk that we could be found to be in violation of various laws and regulations.

Unresolved Staff Comments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors